AM Best has affirmed the Financial Strength Rating of A- (Excellent) and the Long-Term Issuer Credit Rating of “a-” (Excellent) of Dubai Insurance Company (PSC) (DIN) (United Arab Emirates). The outlook of these Credit Ratings (ratings) is positive.
The ratings reflect DIN’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.
The positive outlooks reflect AM Best’s expectation that successful execution of recent business initiatives, including the Worker Protection Program (WPP) and the Involuntary Loss of Employment (ILOE) consortium products, will enhance the company’s business profile and support its continued strong operating performance over the medium term.
DIN’s balance sheet strength is underpinned by risk-adjusted capitalisation at the strongest level, as measured by Best’s Capital Adequacy Ratio (BCAR), which has been supported by strong organic capital generation in recent years. The assessment factors in the company’s sufficient liquidity and prudent reserving, which incorporates buffers over the actuarial best estimate. An offsetting factor in the balance sheet strength assessment is DIN’s high dependence on reinsurance as demonstrated by a retention ratio of 29.0% in 2022. The associated counterparty credit risk is mitigated partially by the use of a panel of financially sound reinsurance partners. The assessment also considers the material share of equity holdings in DIN’s investment portfolio and its exposure to fair value fluctuations, which introduces the potential for volatility in capital and surplus.
The company has a track record of strong operating performance as demonstrated by an excellent five-year (2018-2022) weighted average combined ratio and return on equity (ROE) of 75.7% and 12.9%, respectively (as calculated by AM Best). In 2022, DIN reported a technical profit of AED 64.8 million, equating to a combined ratio of 84.3%. The earnings of the WPP have made a material contribution to the company’s technical results since its inception in 2018, due to a robust loss ratio and significant inward reinsurance commissions. Overall, DIN’s portfolio maintained a strong underwriting performance in 2022, although the market remained very competitive with significant pressure on premium rates.
DIN has enhanced its market position in a highly competitive market without compromising technical profitability in recent years. The incorporation of the WPP product has diversified DIN’s business mix, which historically was concentrated primarily in motor and medical segments in line with other domestic insurers. Furthermore, the introduction of the ILOE scheme in the UAE in 2023 is expected to continue to assist DIN in growing its top line and enhancing its market position. DIN is the consortium leader for the WPP and ILOE schemes. Overall, in 2022, the company reported an increase in gross written premiums of 20% to AED 1.5 billion, supported by growth in most lines of business, including DIN’s non-consortium products.
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Todor Kitin, ACA
Senior Financial Analyst
+44 20 7397 0335
Associate Director, Public Relations
+1 908 439 2200, ext. 5159
Alex Rafferty, ACA
Associate Director, Analytics
+44 20 7397 0312
Senior Public Relations Specialist
+1 908 439 2200, ext. 5098