AM Best Affirms Credit Ratings of Arabia Insurance Company sal

LONDON, September 09, 2022–(BUSINESS WIRE)–AM Best has affirmed the Financial Strength Rating of B+ (Good) and the Long-Term Issuer Credit Rating of “bbb-” (Good) of Arabia Insurance Company sal (AIC) (Lebanon). The outlook of these Credit Ratings (ratings) is negative.

The ratings reflect AIC’s balance sheet strength, which AM Best assesses as strong, as well as its adequate operating performance, neutral business profile and appropriate enterprise risk management (ERM).

The negative outlooks reflect ongoing country risk pressures on AIC’s credit profile stemming from its exposure to Lebanon, where its head office is located and approximately 8% of total investments were held and 3% of revenues originated in 2021. The negative outlooks also factor in the company’s use of debt to support its operations, and the significant refinancing risk associated with its exposure to debt with a short maturity.

AIC’s balance sheet strength is underpinned by risk-adjusted capitalization at the strongest level, as measured by Best’s Capital Adequacy Ratio (BCAR). The assessment factors in the solid geographic diversification of AIC’s exposures in terms of operations and assets, which to some extent insulates the group from the very high political, economic and financial system risks in Lebanon. A partially offsetting rating factor is AIC’s limited capital fungibility, constrained by increased regulatory solvency requirements in the jurisdictions in which the group operates.

AIC has a track record of adequate operating performance, demonstrated by a five-year (2017-2021) weighted average return on equity (ROE) of 1.2%. Results have deteriorated in the past two years, negatively impacted by one-off events, including the explosion in the port of Beirut in 2020, and the devaluation of the Lebanese pound in 2021, translating in ROEs of -6.2% and 0.0% for each of these years, respectively. AM Best expects prospective operating performance to improve and

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AM Best Affirms Credit Ratings of Emirates Insurance Company PJSC

LONDON, August 04, 2022–(BUSINESS WIRE)–AM Best has affirmed the Financial Strength Rating of A- (Excellent) and the Long-Term Issuer Credit Rating of “a-” (Excellent) of Emirates Insurance Company PJSC (EIC) (United Arab Emirates). The outlook of these Credit Ratings (ratings) is stable.

The ratings reflect EIC’s balance sheet strength, which AM Best assesses 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 capitalization at the strongest level, as measured by Best’s Capital Adequacy Ratio (BCAR), supported by low retained underwriting risk. The company’s balance sheet strength assessment also benefits from its good liquidity position and prudent reserving practices. Partially offsetting balance sheet strength factors include a degree of concentration within the company’s investment portfolio to equity holdings in the UAE, which EIC is addressing by diversifying its equity investments, and its moderately high reliance on reinsurance. In AM Best’s view, the credit risk associated with the latter is mitigated partially by the use of reinsurers of sound financial strength.

EIC has a track record of strong operating performance, reporting a five-year (2017-2021) weighted average return on equity of 9.5%. The company has demonstrated strong underwriting performance over time, as evidenced by a five-year (2017-2021) weighted average combined ratio of 90.1%. However, 2021 was a more challenging year for EIC, with the combined ratio reaching 96.3% (2020: 89.0%), which is above the company’s longer term average.

EIC maintains a well-established brand and position in the UAE insurance market. In 2021, the company generated gross written premium (GWP) of AED 1.1 billion (USD 304.5 million) and ranked as the sixth-largest insurer in its domestic market, based on GWP. EIC writes a diversified portfolio of non-life insurance and reinsurance business,

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AM Best Affirms Credit Ratings of China Merchants Insurance Company Limited

HONG KONG, July 22, 2022–(BUSINESS WIRE)–AM Best has affirmed the Financial Strength Rating of A- (Excellent) and the Long-Term Issuer Credit Rating of “a-” (Excellent) of China Merchants Insurance Company Limited (CMI) (Hong Kong). The outlook of these Credit Ratings (ratings) is stable.

The ratings reflect CMI’s balance sheet strength, which AM Best assesses as very strong, as well as its adequate operating performance, limited business profile and appropriate enterprise risk management. The ratings also reflect the parental support from China Merchants Group Limited (CMG), including capital support, brand recognition, investment management and risk oversight.

CMI’s very strong balance sheet strength assessment is underpinned by its strongest level of risk-adjusted capitalisation, as measured by Best’s Capital Adequacy Ratio (BCAR). The company’s capital and surplus continued to grow organically in 2021 through full retention of operating profits. The company maintained a conservative investment strategy, with a majority of its assets allocated to cash, bank deposits and short-duration bonds. Premium cession increased as the proportion of commercial business enlarged. The reinsurance program remains comprehensive with reinsurers of good credit quality.

CMI’s operating performance was positive in 2021, with a profit after tax of HKD 29 million (USD 3.7 million), supported by positive underwriting and investment results. The company has been profitable over the past five years with an average return on equity of 4.2% (2017-2021). Underwriting results showed a favorable improvement in 2021, with a net combined ratio of 84.9%, mainly supported by better claims experience during the year. Increased reinsurance commission income also helped to offset the upward pressure in the management expense ratio. A growing stream of interest income over the past five years also contributed to the company’s positive and stable investment results, although yields remain low.

CMI maintained a stable-yet-small market presence

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