LONDON–(BUSINESS WIRE)–AM Best has affirmed the Financial Strength Rating of A- (Excellent) and the Long-Term Issuer Credit Rating (Long-Term ICR) of “a-” of Alliance Insurance (PSC) (Alliance) (United Arab Emirates). The outlook of these Credit Ratings (ratings) remains stable.
The ratings reflect Alliance’s balance sheet strength, which AM Best categorises as very strong, as well as its strong operating performance, limited business profile and appropriate enterprise risk management.
Alliance’s balance sheet strength is underpinned by risk-adjusted capitalisation at the strongest level, as measured by Best’s Capital Adequacy Ratio (BCAR). Alliance’s capital position is supported by high earnings retention, a conservative investment portfolio and low underwriting leverage. An offsetting factor is the company’s high reinsurance dependence; however, this is mitigated partly through the use of strong reinsurance counterparties.
Alliance’s strong operating performance reflects a track record of solid underwriting profitability, as demonstrated by a 10-year (2009-2018) weighted average combined ratio of 67.7% and return on equity of 11.8% over the same period. The company’s technical performance is moderately reliant on the life segment, with 2018 technical profits being split 62% to 38% for life and non-life. Despite the high levels of competition in the market, AM Best expects Alliance to maintain its strong financial metrics through stringent underwriting controls and prudent risk selection.
Alliance’s business profile as a mid-tier player domestic market participant is unlikely to change over the near term, as the company focuses on underwriting profitability in an increasingly competitive market. While the company has been successful in its current strategy to deliver strong financial metrics, the company will be challenged to broaden its distribution platforms to find profitable growth opportunities.
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