A.M. Best Affirms Credit Ratings of Alliance Insurance (PSC)
A.M. Best has affirmed the Financial Strength Rating of A- (Excellent) and the Long-Term Issuer Credit Rating of “a-” of Alliance Insurance (PSC) (Alliance) (United Arab Emirates).
The outlook of these Credit Ratings (ratings) is stable. The ratings reflect Alliance’s strong risk-adjusted capitalisation, solid earnings and moderate business profile.
Alliance maintains strong risk-adjusted capitalisation that benefits from low underwriting leverage, a conservative investment portfolio and a reinsurance programme of good credit quality. A.M. Best expects internal capital generation from strong underwriting performance to adequately support strategic initiatives, as the company grows its franchise over the coming years. Alliance also benefits from an unleveraged balance sheet and excellent liquidity.
Alliance has demonstrated a track record of excellent profitability, with overall earnings reaching AED 45 million ($12 million) in 2016, equivalent to a return on equity of 10 per cent. Alliance’s earnings are supported by a solid underwriting performance, with life business generating a 14 per cent gross profit margin and the non-life segment’s combined ratio improving to 69 per cent in 2016. Furthermore, Alliance’s profitability is supplemented by a conservative and stable investment profile that yielded a five per cent return.
Alliance is a medium-size composite insurance company operating in the United Arab Emirates. The company has a modest but balanced profile, providing life and general insurance products. Alliance’s premium retention on non-life business remains low, emphasising its high level of reinsurance dependence. Overall gross premiums declined marginally by 1.5 per cent in 2016, to AED 301 million ($82 million), reflecting portfolio cleansing as well as the highly competitive insurance market in the UAE.