Dubai-Based National General Insurance Co. (PSC) Ratings Raised To 'BBB+' On Strengthening Profile
Standard & Poor's Ratings Services said today it raised its long-term counterparty credit and financial strength ratings on Dubai-based National General Insurance Co. (PSC) to 'BBB+' from 'BBB'. The outlook is stable."The rating action reflects our view of NGI's overall strengthened business and financial profile and specifically the company's continuously strong underwriting results, achieved in a very demanding economic and competitive environment," said Standard & Poor's credit analyst Wolfgang Rief. We expect that NGI will grow significantly and profitably, based on cooperations with its key shareholders and large international partners. These strengths are partially offset, in our view, by NGI's significant investments in Dubai's volatile property markets.The ratings on NGI are supported by what we view as a good and further improving competitive position in its home market of the United Arab Emirates (UAE). With gross premiums written of UAE dirham (AED)402.9 million ($110 million), NGI is the eighth-largest conventional insurer in UAE based on 2009 gross written premiums, but a leader based on underwriting profitability in UAE, which is a very competitive insurance market. NGI benefits from its favored status as insurance provider to clients of its key shareholder groups, in particular members of the Emirates NBD PSJC (ENBD) and Commercial Bank of Dubai (CBD; both entities not rated by Standard & Poor's). In addition, NGI benefits from collaboration with experienced international insurers and reinsurers to develop and distribute new business lines. "The stable outlook reflects our expectation that NGI will be able to enhance its competitive position within U.A.E.'s insurance market, especially by further developing its relationship with ENBD, through the product and marketing know-how contributed by NGI's strategic partner Aviva, as well as the cooperation with Allianz in the medical business," said Mr. Rief. We believe that NGI's business growth should be clearly above the market in 2011 and 2012 as its distribution and product capabilities expand. We expect NGI's underwriting performance to remain strong, reflected in combined ratios of 80% or better. We furthermore expect NGI's return on equity (ROE) to recover further in 2011 toward the company's target of about 20% after an estimated 17% in 2010. However, we believe the medium-term average expectations will be subject to potential asset-value volatility. We believe that NGI's assets are likely to continue to reflect good liquidity and provide good coverage of technical and other liabilities.
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