Best Assigns ‘B++’ Rating to Dubai Insurance

A.M. Best Europe – Rating Services Limited has assigned a financial strength rating of ‘B++’ (Good) and issuer credit rating of “bbb” to Dubai Insurance Company PSC (DIC), which is based in the United Arab Emirates (UAE). The outlook for both of the ratings is stable.

The ratings of DIC “reflect its strong level of risk-adjusted capitalization and good underwriting performance. Partially offsetting the ratings is DIC’s modest business profile and marginal level of enterprise risk management,” said Best.

The rating g agency added that it “anticipates that DIC is likely to maintain a strong level of risk-adjusted capitalization over the coming years. Capitalization is supported by a large capital base, a low level of retention and a reinsurance panel of good credit quality. The high concentration of equity securities, particularly within the local banking sector, is of some concern and can give rise to volatility in DIC’s capital position.

“Since the new management team was formed four years ago, DIC has demonstrated an improving track record in underwriting profitability, which has been sustained with growth rates above the market for this period, with a high volume of new business generation. Underwriting profits are heavily supported by commission income for business lines with a low level of retention, while those retained generally enjoy good combined ratios.”

Best also indicated that it “anticipates that a good level of profitability will be maintained in future years. Although DIC currently maintains only a modest competitive market position, A.M. Best anticipates that the company is likely to drive significant premium growth over the short to medium term. DIC’s gross premium income is well diversified by line of business, yet as with many of its peers, its retained business is concentrated within the motor, medical and life business lines.”

Best said it “considers that DIC’s level of enterprise risk management is marginal, with a lack of catastrophe and actuarial analysis being of particular concern. Going forward, DIC’s management has taken the initiative to improve its investment profile by divesting from equities, which is viewed as a positive development.”

Source: A.M. Best