AM Best Revises Outlooks to Negative, Affirms Credit Ratings of Alliance Insurance (PSC)

AM Best has revised the outlooks to negative from stable and affirmed the Financial Strength Rating of A- (Excellent) and the Long-Term Issuer Credit Rating of “a-” (Excellent) of Alliance Insurance (PSC) (Alliance) (United Arab Emirates).

The Credit Ratings (ratings) reflect Alliance’s balance sheet strength, which AM Best assesses as very strong, as well as its strong operating performance, limited business profile and appropriate enterprise risk management.

The revision of the outlooks to negative from stable reflects pressure on Alliance’s operating performance assessment, stemming from its declining underwriting results. Alliance has been reporting non-life underwriting losses since 2022 following material expansion in the medical and motor segments during a period of intense pricing pressure. This resulted in a three-year (2022-2024) weighted average net/net combined ratio of 139.6%, as calculated by AM Best. Alliance’s operating results have been supported in recent years by its profitable life book of business, although a continuous reduction in life business volumes has enhanced pressure on the company’s profitability.

Alliance’s balance sheet strength is underpinned by its risk-adjusted capitalisation, as measured by Best’s Capital Adequacy Ratio (BCAR), at the strongest level. The company maintains a significant capital buffer in excess of the minimum required for the strongest BCAR assessment, supported by low underwriting leverage and a conservative investment portfolio allocation. An offsetting factor in the balance sheet strength assessment is Alliance’s growing dependence on reinsurance to manage its non-life insurance risks. However, the associated credit risk is mitigated partially by the use of a diversified reinsurance panel of sound financial strength.

Alliance’s business profile is limited, operating within the highly competitive UAE insurance market, where finding profitable growth opportunities is a challenge. Over recent years, premium growth has been limited to its non-life business due to headwinds that have limited its ability to grow its life book of business.

This press release relates to Credit Ratings that have been published on AM 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 see AM Best’s Recent Rating Activity web page. For additional information regarding the use and limitations of Credit Rating opinions, please view Guide to Best’s Credit Ratings. For information on the proper use of Best’s Credit Ratings, Best’s Performance Assessments, Best’s Preliminary Credit Assessments and AM Best press releases, please view Guide to Proper Use of Best’s Ratings Assessments.

AM Best is a global credit rating agency, news publisher and data analytics provider specialising in the insurance industry. Headquartered in the United States, the company does business in over 100 countries with regional offices in London, Amsterdam, Dubai, Hong Kong, Singapore and Mexico City. For more information, visit http://www.ambest.com.

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Contacts:

Emily Thompson

Senior Financial Analyst

+44 20 7397 0291

[email protected]

Jessica Botelho-Young, CA

Director, Analytics

+44 20 7397 0310

[email protected]

Christopher Sharkey

Associate Director, Public Relations