Sukoon Insurance (Sukoon) continues to exhibit above-average operating performance, despite the heavy floods that hit the UAE in 2024, according to S&P Global Ratings (S&P).
The company reported AED267m ($72.7m) in net profits in 2024, 4% higher than in 2023, despite the flood claims and AED42m in one-off charges. In 2024, Sukoon reported insurance revenue growth of 17%, with the top line reaching AED5.4bn.
Over the next two years, S&P expects Sukoon to report net profits of about AED300m-AED400m, allowing dividend payouts at least in line with previous years and enabling the company to achieve its growth targets.
Over the short-to-medium term, Sukoon's main growth drivers will include new initiatives through Sukoon Takaful, Lloyd's syndicate and inward treaty reinsurance, individual life, and pension management (end-of-service gratuity). With mid-single-digit growth from its underlying book of business, S&P forecasts revenue growth at about 10%-15% per year over 2025-2027, thanks to stronger growth from these new initiatives, albeit from a smaller base.
Ratings affirmed
Reflecting Sukoon's resilient performance, S&P has affirmed the insurer’s 'A' issuer credit and insurer financial strength ratings on UAE-based Sukoon Insurance. The global credit rating agency also affirmed its 'A' financial strength rating on Sukoon's guaranteed subsidiary, Islamic insurer Sukoon Takaful.
The outlooks on all ratings are ‘Stable’. This indicates that S&P expects Sukoon to maintain operating performance in line with the rating agency’s base-case assumptions, with capital adequacy remaining at the 99.99% confidence level over the next two years.
S&P has revised as well its assessment of Sukoon's competitive position to ‘Strong’ from ‘Satisfactory’. Sukoon's strong competitive standing in the market allowed it to successfully navigate the challenging conditions last year, said S&P. It allowed the insurer to secure favourable reinsurance terms that continue to support its expansion strategy in the UAE and abroad.
Business risk profile
Sukoon's diversification efforts, both locally and internationally, support S&P’s view of its business risk profile. Sukoon currently derives about one-half of its business from medical insurance, and the remainder from motor and commercial lines, as well as life insurance (mainly group and credit life).