Abu Dhabi – Mubasher: Moody's Investors Service recently affirmed Al Ain Ahlia Insurance Company’s insurance financial strength rating (IFSR) at ‘A3’, with a stable outlook, according to a press release.
Moody's attributed the rating to the company’s powerful market position, being one of the top five insurers benefiting from the partial government ownership in the UAE.
The ‘A3’ rating also reflects Al Ain Ahlia’s good technical underwriting experience in the oil and gas sector, as well as its steady relationships with key international reinsurers.
Furthermore, the credit rating agency indicated that the insurer has a strong cap that continues to mainly expand with a gross underwriting leverage (GUL) of 1.6x at the end of 2021, in addition to solid underwriting profitability with a five-year average combined ratio (COR) of 80.2%.
Al Ain Ahlia’s motor and medical businesses foster its size and market share. However, Moody's believes that the firm's leading position in commercial insurance is the main driver of its franchise strength.
Although the projected loss of the Aetna medical portfolio will cause a significant drop in the insurers' gross premiums, Moody's said this will not have a major effect on Al Ain Ahlia's overall market position.
Meanwhile, the stable outlook highlights Moody's predictions that Al Ain Ahlia will maintain a stable market position in its core business lines, while rebuilding its base in the new mandatory lines over time. The UAE-based insurer will also preserve its good profitability and cap.
The ADX-listed firm holds a positive track record of underwriting profitability, with an average combined ratio of nearly 80% for the five-year period which ended in 2021, in addition to an average return on capital of 4.7%.
Amid pricing pressure in the market, the company's underwriting profitability has plummeted this year, registering a combined ratio of 79% during the first nine months (9M) of 2022, versus 67% in 2021.
In this regard, Al Ain Ahlia teamed up with large insurers in the markets to take underwriting and pricing actions that should enhance profitability in 2023.
