Abu Dhabi National Insurance Company (ADNIC) has a track record of strong operating performance, evidenced by a return on equity exceeding 12% in all of the last five years (2019-2023), noted AM Best.
The company’s earnings benefit from robust non-life underwriting profits, the result of good underwriting discipline, and investment returns. In 2023, ADNIC reported a post-tax profit of AED401.2m ($109.2m), which includes investment income of AED206.7m. Despite challenging market conditions and exposure to weather-related events in the UAE, ADNIC reported a strong post-tax profit of AED205.2m over the first six months of 2024 (June 2023: AED204.4m).
Ratings affirmed
AM Best has affirmed ADNIC’s Financial Strength Rating of ‘A’ (Excellent) and Long-Term Issuer Credit Rating of ‘a’ (Excellent). The outlook of these credit ratings is stable.
The ratings reflect ADNIC’s balance sheet strength, which AM Best assesses as very strong, as well as its strong operating performance, neutral business profile, and appropriate enterprise risk management.
ADNIC’s balance sheet strength is underpinned by its risk-adjusted capitalisation, as measured by Best’s Capital Adequacy Ratio (BCAR), at the strongest level. AM Best expects the company’s risk-adjusted capitalisation to remain comfortably at the strongest level, underpinned by sufficient organic capital generation to support business plans. The company’s balance sheet strength assessment also benefits from its excellent liquidity position and good financial flexibility.
An offsetting factor in the balance sheet strength assessment is ADNIC’s dependence on reinsurance to write large commercial risks; however, the associated credit risk is mitigated partially by the use of a diversified reinsurance panel of sound financial strength.
Business profile
ADNIC holds a market-leading position in the UAE, where it ranks as the second-largest insurance company by insurance revenue, among listed insurers. In 2023, the company reported insurance revenue of AED4.64bn (2022: AED4.66bn). ADNIC writes a well-diversified portfolio by line of business, although the portfolio is weighted to domestic medical business on a net basis.
During 2024, ADNIC expanded its geographical reach through the acquisition of a 51% shareholding of Allianz Saudi Fransi Cooperative Insurance Company (Saudi Arabia). ADNIC has reported consolidated financial results since the date of acquisition on 17 April 2024 and has reported significant growth in consolidated insurance revenue to AED3.3m for the first six months of 2024 (June 2023: AED2.1m).