Abu Dhabi – Mubasher: Moody's Investors Service upgraded Wednesday to Baa1 from Baa2 the insurance financial strength rating (IFSR) of Al Fujairah National Insurance Company (AFNIC), with a Stable outlook.
Established in 1976, AFNIC is the largest insurer in Fujairah. It writes a broad mix of non-life insurance classes of business and more than 50% of its business is written within Fujairah, with the balance through branches within the other Emirates. AFNIC has a dominant market position in Fujairah, albeit a much smaller 0.5% market share across the United Arab Emirates (UAE), according to Moody’s.
AFNIC is over 80% owned by the Government of Fujairah, whilst Members of the Royal Family of Fujairah also control a further c.15% of AFNIC through a linked investment company; as a result Moody's assesses AFNIC as a Government-Related Issuer (GRI) and considers the potential support for AFNIC from its shareholders to be a key positive driver for the rating.
Moody’s said the rating upgrade for AFNIC reflects key improvements in its standalone credit metrics including the improved levels of capitalisation, with gross underwriting leverage (GUL) improving to 1.2x as at YE 2014 from 2.2x as at YE 2012; the improved and sustained strong bottom line profitability, with a 5 year average return on capital (ROC) of 7.3% and a good sharp ratio of return on capital, which measures the very strong consistency of returns on a 5 year average basis; the good underwriting performance with a 5 year average combined ratio (COR) of 93.8% in 2014; and lowered and diminishing levels of leverage, with the financial and total leverage reducing to 13.8% at YE 2014 from 27.7% at YE 2012.
