A.M. Best Affirms Ratings of Union Insurance Company P.S.C.

LONDON--(BUSINESS WIRE)-- A.M. Best has affirmed the financial strength rating (FSR) of B++ (Good) and the issuer credit rating (ICR) of “bbb” of Union Insurance Company P.S.C. (Union) (United Arab Emirates). The outlook for the FSR remains stable, while the outlook for the ICR remains positive.

The ratings reflect Union’s strong risk-adjusted capitalisation, improving technical performance and good business profile. An offsetting rating factor is Union’s volatile investment results, which have been impacted by the company’s concentration toward domestic equities and real estate.

Union’s risk-adjusted capitalisation remained at a strong level during 2014, despite substantial underwriting growth driving an increase in net required capital for the year. A.M. Best anticipates Union’s prospective capital adequacy to remain commensurate with the current rating level, supported by strong internal capital generation.

Union’s technical performance improved during 2014, with a combined technical profit of AED 38.5 million (USD 10.5 million), compared with AED 2.0 million (USD 0.5 million) in 2013. This improvement reflects continued remedial actions and a stronger underwriting discipline, imposed by the company’s new management team following their appointment in 2012. Despite strong technical performance in 2014, overall earnings remain volatile due to Union’s high exposure to real estate and equity investments. For the first nine months of 2015, the company reported an operating loss of AED 3.0 million (USD 0.8 million), compared with a profit of AED 43.8 million (USD 11.9 million) for the same period in 2014. Despite a strong technical profit of approximately AED 35.0 million (USD 9.5 million), unrealised losses from the company’s investment portfolio resulted in a deteriorated operating result for the first nine months of 2015.

Union’s market share within the United Arab Emirates (UAE) has strengthened notably over the past three years, with the company achieving a top six position among UAE-listed insurers. The company has a diversified underwriting portfolio comprising life and non-life business. Union’s life segment, in particular, is experiencing rapid growth following the company obtaining a license to commence underwriting life business in January 2013. Despite management’s successful execution of its business plan to date, the competitive market which persists in the UAE presents significant challenges for the company to achieve its medium-term strategic targets.

In accordance with Regulation (EC) No. 1060/2009, the following is a link to required disclosures: A.M. Best Europe - Rating Services Limited Supplementary Disclosure.

This press release relates to rating(s) that have been published on A.M. Best's website. For all rating information relating to the release and pertinent disclosures, including details of the office responsible for issuing each of the individual ratings referenced in this release, please visit A.M. Best’s Ratings & Criteria Center.

A.M. Best Company is the world's oldest and most authoritative insurance rating and information source. For more information, visit www.ambest.com.

Copyright © 2015 by A.M. Best Company, Inc. ALL RIGHTS RESERVED.

View source version on businesswire.com: http://www.businesswire.com/news/home/20151113005545/en/

A.M. Best
Myles Gould, +(44) 20-7397-0267
Senior Financial Analyst
[email protected]
or
Mahesh Mistry, +(44) 20-7397-0325
Director, Analytics
[email protected]
or
Christopher Sharkey, +(1) 908-439-2200, ext. 5159
Manager, Public Relations
[email protected]
or
Jim Peavy, +(1) 908-439-2200, ext. 5644
Assistant Vice President, Public Relations
[email protected]

Source: A.M. Best Company, Inc.

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