AM Best assigns credit ratings to Al Fujairah National Insurance Company PJSC

The ratings also reflect rating enhancement from AFNIC's majority shareholder, the government of Fujairah, which holds in excess of 80% of AFNIC directly


LONDON: AM Best has assigned a Financial Strength Rating of B++ (Good) and a Long-Term Issuer Credit Rating of “bbb” (Good) to Al Fujairah National Insurance Company PJSC (AFNIC) (United Arab Emirates). The outlook assigned to these Credit Ratings (ratings) is stable.

The ratings reflect AFNIC’s balance sheet strength, which AM Best assesses as strong, as well as its strong operating performance, limited business profile and marginal enterprise risk management (ERM). The ratings also reflect rating enhancement from AFNIC’s majority shareholder, the government of Fujairah, which holds in excess of 80% of AFNIC directly. The government of Fujairah has demonstrated capital support to AFNIC through past capital injections and allowing the accumulation of capital at the company through bonus shares in lieu of cash distributions.

AFNIC’s operations are concentrated to the competitive and highly fragmented UAE non-life insurance market, where it writes a small share of total market premiums. In 2020, AFNIC reported gross written premium of AED 247 million. In line with a number of its market peers, AFNIC’s underwriting portfolio is focused on motor and medical business. The company does, however, benefit from some preferential access to government originated business in the Fujairah region.

AFNIC’s balance sheet strength is underpinned by a very strong level of risk-adjusted capitalisation, as measured by the Best Capital Adequacy Ratio (BCAR), as at year-end 2020. The company has demonstrated its ability to strengthen its capital base over time through the retention and capitalisation of earnings. An offsetting balance sheet strength factor is AFNIC’s high-risk investment strategy. Invested assets are concentrated to equity securities (65% of total investments at year-end 2020) and real estate (17%), leaving the balance sheet heavily exposed to fair value fluctuations. Furthermore, AM Best views concentrations within the company’s equity portfolio to a single strategic holding as elevating investment risk.  

AFNIC has a track record of strong operating performance, demonstrated by a five-year (2016-2020) weighted average return-on-equity ratio of 11.8%. Profits have been underpinned by consistently positive technical performance, despite increasing management expenses in recent years. AFNIC’s recent underwriting performance has translated to a strong five-year (2016-2020) weighted average combined ratio of 88.1%. Investment performance, albeit subject to volatility over recent years, has further supplemented earnings, with a five-year (2016-2020) average yield of 1.5% (including gains and losses).

AM Best views AFNIC’s ERM framework and capabilities as marginal for the size and complexity of its operations. The company has begun formalising and quantifying the ERM framework, through the help of external consultants. AM Best views ongoing ERM developments as necessary to manage the company’s risk profile, notably investment risk.

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 Guide to Best’s Credit Ratings. For information on the proper use of Best’s Credit Ratings, Best’s Preliminary Credit Assessments and AM Best press releases, please view Guide to Proper Use of Best’s Ratings & Assessments.

AM Best is a global credit rating agency, news publisher and data analytics provider specialising in the insurance industry. Headquartered in the United States, the company does business in over 100 countries with regional offices in London, Amsterdam, Dubai, Hong Kong, Singapore and Mexico City. For more information, visit

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