AM Best revised the outlook from stable to positive and affirmed the financial strength rating of A- (Excellent) and the long-term issuer credit rating of “a-” (Excellent) of Dubai Insurance Company (PSC) ( DIC) (
The credit ratings (ratings) reflect the strength of DIC’s balance sheet, which AM Best rates as very strong, as well as its strong operating performance, limited business profile and appropriate management of business risks.
The revised outlook to positive reflects AM Best’s expectation that DIC will continue to strengthen its market position and deliver strong underwriting results benefiting from the profitable growth of the Worker Protection Program (WPP) product, as well as active development of new products through a consortium led by DIC.
DIC’s balance sheet strength is underpinned by industry-leading risk-adjusted capitalization as measured by Best’s Capital Adequacy Ratio (BCAR), supported by strong organic capital generation. The valuation takes into account the company’s sufficient liquidity and prudent provisioning, which incorporates cushions in relation to the actuarial best estimate. An offsetting factor in assessing the strength of the balance sheet is the company’s heavy reliance on reinsurance, as evidenced by a retention rate of 24.0% in 2021. The associated counterparty credit risk is partially mitigated by the using a panel of strong international reinsurers of high credit quality. . The valuation also takes into account the large share of equity holdings in the investment portfolio and DIC’s exposure to changes in their valuation, which introduces potential capital volatility through other comprehensive income. .
The company has a track record of strong operating performance, as evidenced by an excellent five-year weighted average combined ratio (2017-2021) and return on equity (ROE) of 72.6% and 11.7%, respectively (as than calculated by AM Best). In 2021, DIC recorded an underwriting profit of AED 62.1 million, which equates to an ROE of 14.0%. WPP earnings have made a significant contribution to the company’s underwriting results since its inception in 2018, helped by the product’s substantial premium growth, low claims ratio and large inbound reinsurance commissions. Furthermore, all of DIC’s other lines of business were also profitable in 2021, although the market remained very competitive, with significant pressure on premium rates.
DIC has successfully strengthened its market position in a highly competitive market without compromising technical profitability over the past few years. The incorporation of the WPP product has diversified DIC’s business mix, which has historically been concentrated primarily in the automotive and medical lines of business, like other national insurers.
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Financial Analyst, ACA
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Manager, Public Relations
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Jessica Botelho-Young, CA
Associate Director, Analytics
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+1 908 439 2200 ext. 5204
Source: AM Best