AM Best Affirms Credit Ratings of Emirates Insurance Company P.S.C.

The outlook of these Credit Ratings (ratings) is stable.


LONDON, AM Best has affirmed the Financial Strength Rating of A- (Excellent) and the Long-Term Issuer Credit Rating of “a-” of Emirates Insurance Company P.S.C. (EIC) (United Arab Emirates). The outlook of these Credit Ratings (ratings) is stable.

The ratings reflect EIC’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.

EIC’s balance sheet strength is underpinned by risk-adjusted capitalisation that is at the strongest level, as measured by Best’s Capital Adequacy Ratio (BCAR) at year-end 2018. Capital consumption is driven largely by asset risk arising from the company’s concentrated investment portfolio, which is weighted toward domestic equities; however, EIC has sufficient capital buffers to absorb volatility in these assets. The company’s balance sheet also benefits from strong liquidity and prudent reserving practices. A partial offsetting factor is EIC’s high dependence on reinsurance, evidenced by its retention ratio of 51.6% in 2018. However, credit risk is reduced by the excellent credit quality of its reinsurance panel.

The strong assessment of operating performance is demonstrated through a track record of robust and relatively stable underwriting results, highlighted by a five-year average combined ratio of 88.5% (2014-2018) and average return on equity of approximately 10% over the same period. EIC reported profit before tax of AED 114 million (USD 31 million) for year-end 2018, with a good balance of earnings between technical and

investment income, translating into a return on equity of 10.4%. The company’s main source of underwriting profit remains driven by its domestic operations, specifically its motor book. In 2018, the domestic motor and property classes benefited from enhanced risk selection and a relatively benign loss environment.

EIC maintains a competitive market position in its domestic market with a market share in terms of gross written premiums of 6.1% at year-end 2018. The company’s profile is enhanced by geographical diversification from its specialist reinsurance arm, Emirates Insurance Company International (EIC International). EIC International currently contributes 21% to the overall portfolio of EIC; however, the company has ceased underwriting international marine and specialty space and aviation business, due to volatile performance and expectations of poor prospective market conditions.

This press release relates to Credit Ratings that have been published on AM Best’s website. For all rating information relating to the release and pertinent disclosures, including details of the office responsible for issuing each of the individual ratings referenced in this release, please see AM Best’s Recent Rating Activity web page. For additional information regarding the use and limitations of Credit Rating opinions, please view Understanding Best’s Credit Ratings. For information on the proper media use of Best’s Credit Ratings and AM Best press releases, please view Guide for Media - Proper Use of Best’s Credit Ratings and AM Best Rating Action Press Releases.

AM Best is a global rating agency and information provider with a unique focus on the insurance industry. Visit for more information.

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