A.M. Best Assigns Credit Ratings to Dubai National Insurance & Reinsurance P.S.C.. The outlook assigned to these Credit Ratings (ratings) is stable.
DNIR maintains strong risk-adjusted capitalisation that benefits from low underwriting leverage and a reinsurance program of good credit quality. Capital consumption is driven largely by investment risk stemming from the company’s concentrated exposure to volatile equity and real estate investments. A.M. Best expects prospective risk-adjusted capitalisation to remain strong, supported by good internal capital generation and controlled underwriting growth. DNIR also benefits from an unleveraged balance sheet and excellent liquidity.
DNIR has demonstrated a track record of excellent profitability, reporting a net profit of AED 44.0 million (USD 12.0 million) in 2016, compared with AED 40.8 million (USD 11.1 million) in 2015. DNIR’s underwriting operations generated an excellent five-year average combined ratio of 85% (2012-2016). DNIR has maintained consistent underwriting performance despite prevailing competitive market conditions in the UAE, with significant pressure on premium rates across most lines of business. A.M. Best expects DNIR’s prudent approach to risk selection and focus on profitability over top-line growth to support strong future technical performance. Interim results for 2017 indicate an improvement in the company’s technical profitability.
DNIR’s gross written premiums reached AED 260.1 million (USD 70.8 million) in 2016, ranking the company as a mid-tier insurer within the UAE insurance market. DNIR’s franchise benefits from access to business through its shareholders and affiliated companies. Nonetheless, on a net basis the company’s profile remains small, reflective of the low level of retention on commercial lines of business.
The company has taken positive steps to strengthen its ERM framework in recent years. DNIR has improved its identification and quantification of key risks and imposed greater controls to mitigate and reduce the potential impact on earnings and risk adjusted capitalisation. However, further steps are required for the ERM framework to be fully embedded throughout the organisation.
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