Union Insurance Company's (Union) reported strong financial performance in the last two years with a net income return on equity (ROE) of 17.3% in 2025 and 17.1% in 2024 (2023: -1.2%) and a three-year average ROE of 11.1%, notes Fitch Ratings.
The company also reported strong profitability in 1H2026 with a net profit after tax of AED26m [$7.1m] (1H2025: AED23m). The improved financial performance follows the discontinuation of several unprofitable lines of business in 2023, including the Oman Credit life product and individual life business in the UAE.
Fitch has affirmed Union’s Insurer Financial Strength (IFS) Rating at 'BBB+'. The outlook is ‘Stable’. The rating reflects Union's strong financial performance, capitalisation and reinsurance protection that are partly offset by its company profile due to its small operating scale, says Fitch.
Apart from strong financial performance, other key drivers of Union’s rating include:
Medium-Sized Insurer: Union is a medium-sized insurance company in the UAE with reported insurance revenue up 4% to AED615m in 2025, driven mainly by a 56% increase in motor premiums. The company ranked 17th in the UAE based on gross written premiums, out of 28 listed national insurance companies, but it is well diversified by line of business, writing a mixture of medical, motor, non-motor and life insurance. The medical and motor business lines represent the largest contributors to GWP, accounting for 61% of the total portfolio as the company shifts towards short-tail retail lines.
Union's IFS Rating is below its implied IFS Rating of 'a-', due to its company profile. In Fitch's view, this factor is more of a rating constraint than the scoring weighting alone would indicate, reflecting the company's modest operating scale, as well as its moderate competitive positioning and business risk profile.
Strong Capitalisation: Fitch regards Union's capitalisation and leverage as strong, as reflected in an unchanged 'Extremely Strong' Prism Global score at end-2025. Fitch’s view of Union's capitalisation is supported by the absence of financial leverage in its capital structure. Fitch's assessment of the company's capitalisation benefits from low gross and net leverage and healthy local solvency coverage of 161% at end-1H2026 (end-2025: 175%; end-2024: 143%).
Strong Reinsurance Protection: Union makes significant use of reinsurance across all classes of business, with lower retention rates than the UAE market average for all lines except medical and motor. It has also seen a strong increase in motor business retention to 93% in 2025 (2024: 78%; 2023: 46%). Fitch's view of Union's reinsurance is supported by the strong quality of the reinsurance panel, with reinsurers mostly rated 'A-' and above.
Conservative Investment Portfolio: Fitch views Union's investment and liquidity risk as low due to a large proportion of bank deposits in its investment portfolio. It has divested its real estate exposure in recent years, leaving only modest investment in equities as the only risky assets. These represented 19% of its total shareholder equity at end-2025 (end-2024: 18%).
Adequate Reserving Practices: Fitch assesses Union's reserving adequacy at 'bbb', aligned with the global credit rating agency’s neutral evaluation for the UAE. The company reserves at best estimate and maintains no buffer above this. The reserves are booked at the level recommended by its externally appointed actuary, based in the UAE.