LONDON--(BUSINESS WIRE)--AM Best has affirmed the Financial Strength Rating of A (Excellent) and the Long-Term Issuer Credit Ratings of “a+” (Excellent) of Orient Insurance PJSC (Orient) (United Arab Emirates) and its subsidiaries, Orient Takaful Insurance Company (S.A.E.) (Orient Takaful) (Egypt) and Orient Takaful PJSC (UAE). The outlook of these Credit Ratings (ratings) is stable. These companies collectively are referred to as Orient or the group.
The ratings reflect Orient’s balance sheet strength, which AM Best assesses as very strong, as well as its very strong operating performance, neutral business profile and appropriate enterprise risk management.
Orient’s balance sheet strength is underpinned by its consolidated risk-adjusted capitalisation at the strongest level, as measured by Best’s Capital Adequacy Ratio (BCAR). The group’s balance sheet strength is supported by prudent reserving practices and its strong liquidity position. The majority of the group’s capital consumption in the BCAR model arises from its investment portfolio, which includes a material strategic equity holding that accounted for approximately 17% of total invested assets at year-end 2023 and introduces potential volatility in Orient’s capital and surplus, owing to fair value movements. The group’s remaining invested asset portfolio is relatively conservative, with a weighting toward cash and fixed-term bank deposits. The balance sheet strength assessment also factors in Orient’s high dependence on reinsurance. The associated counterparty credit risk is mitigated partially by the use of a panel of financially sound reinsurance partners.
The group has a track record of very strong operating profitability and in 2023 (under IFRS 17) generated a return-on-equity ratio of 15.5% and a net-net non-life combined ratio of 85.8% (both as calculated by AM Best). Although the group operates in challenging market conditions, including high competition and significant pressure on premium rates, AM Best expects that the group’s prudent approach to risk selection and focus on profitability over top-line growth will sustain its very strong technical performance over the medium-term.
Orient’s business profile assessment reflects the group’s leading market position in the UAE, where it ranked as the largest insurer by insurance services revenue (ISR) and net income. The group’s profile also reflects its strong brand and multichannel distribution network, as well as the affiliation with its ultimate parent, Al-Futtaim Holding Limited. An offsetting factor is Orient’s geographic concentration in the UAE, where approximately 90% of its ISR is generated, although the group continues to develop its regional presence in select markets.
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