AM Best has affirmed the Financial Strength Rating of A- (Excellent) and the Long-Term Issuer Credit Rating of “a-” of National General Insurance Company (P.S.C.) (NGI) (United Arab Emirates) (UAE). The outlook of these Credit Ratings (ratings) remains stable.
The ratings reflect NGI’s balance sheet strength, which AM Best categorises as very strong, as well as its strong operating performance, limited business profile and appropriate enterprise risk management.
NGI’s balance sheet strength is underpinned by risk-adjusted capitalisation at the strongest level, as measured by Best’s Capital Adequacy Ratio (BCAR). The assessment also factors in the company’s good level of liquidity and absence of financial leverage. Offsetting rating factors include NGI’s high dependence on reinsurance and the concentration of its invested assets in the UAE. The balance sheet strength assessment incorporates the UAE’s low economic risk, and moderate political and financial system risk. AM Best expects prospective balance sheet strength to remain at a very strong level, supported by good earnings retention and controlled growth.
The company’s strong operating performance, evidenced by a five-year (2014-2018) weighted average return on equity of 8%, has been driven by robust and improving underwriting results from its non-life portfolio. NGI has demonstrated good underwriting performance across all key non-life lines of business, with a five-year average combined ratio of 91%, excluding unallocated expenses. Operating performance is supported further by stable investment income, with a five-year average investment return (excluding gains) of 3%, in part assisted by the de-risking of the investment portfolio in recent years away from volatile equity investments.
NGI’s profile is limited, due in part to its concentration to the highly competitive UAE market. The company has a well-established profile in the UAE insurance market, where it is one of the top 10 national insurers by gross written premium. It has a strong presence in the motor and medical lines of business and is one of only 12 insurers licensed to participate in the Dubai Health Authority’s mandatory health insurance scheme.