Market Overview

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


A.M. 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 A.M. Best
categorises as very strong, as well as its strong operating performance,
limited business profile and appropriate enterprise risk management

The company's risk-adjusted capitalisation, as measured by Best's
Capital Adequacy Ratio (BCAR), was assessed at the strongest level at
year-end 2017. Capital requirements are largely driven by asset risk
arising from the company's concentrated investment portfolio weighted
toward domestic equities. However, EIC has a sufficient capital buffer
to absorb volatility arising from these assets. In addition, EIC has a
moderate reliance on reinsurers, as the company retains approximately
46% of its premium; however, credit risk is reduced by the company's
reinsurance panel, which is considered to be of good credit quality.

EIC reported profit before tax of AED 110 million for 2017, which is
equivalent to a return on equity of 10.3%. Furthermore, there has
generally been a good balance of earnings between technical and
investment income. EIC has a track record of strong operating and
technical profitability, highlighted by a five-year average (2013-2017)
combined ratio of 89%, which has demonstrated low volatility during this
period. The company's underwriting returns are driven primarily by its
domestic primary operations, and in particular, motor, which benefited
from the introduction of pricing controls by the Insurance Authority
(IA) at the beginning of 2017.

EIC maintains a reasonable market position in the domestic market and
the company's profile is enhanced via geographical diversification from
its specialist reinsurance arm, Emirates Insurance Company International
(EIC Intl). In 2017, EIC Intl ceased underwriting international marine
business, due to volatile performance from this portion of the business
and expectations of poor prospective market conditions. Despite this,
the company's core domestic portfolio continues to perform well and EIC
achieved overall premium growth of 5.4% during 2017, reporting gross
written premiums of AED 1.1 billion.

This press release relates to Credit Ratings that have been published
on A.M. 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 A.M. Best's
Rating Activity
web page. For additional information
regarding the use and limitations of Credit Rating opinions, please view
Best's Credit Ratings
. For information on the proper media
use of Best's Credit Ratings and A.M. Best press releases, please view
for Media - Proper Use of Best's Credit Ratings and A.M. Best Rating
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