Abu Dhabi-headquartered Al Ain Ahlia Insurance Co (AAAIC) has reported slower topline growth and weaker underwriting results than similarly rated peers over the past few years, noted S&P Global Ratings (S&P).
In 2025, AAAIC's insurance revenue stood at AED1.2bn ($327m), marginally above the AED1.1bn reported in 2024. In contrast, the UAE market exhibited strong growth rates of 14% in 2025 and 23% in 2024. Moreover, AAAIC reported combined ratios of 107.5% in 2025 and 112.5% in 2024, while the UAE market averaged 90%-92% in the past two years.
In addition, S&P said, “Contrary to our expectations, operating performance to date in 2026 has failed to improve, with AAAIC recording a net combined ratio of 111.1% during the first quarter (1Q2025: 100.7%). These losses are largely attributable to motor third-party liability business, which has weighed on AAAIC's overall performance.
“We understand that AAAIC either discontinued or repriced the nonperforming contracts, and we expect the motor portfolio to converge toward breakeven levels in 2026. Our base-case scenario now assumes revenue growth of about 10% per year, with combined ratios of 100%-105% in 2026, improving to 96%-98% in 2027-2028.
Outlook revised
S&P has revised its outlook on AAAIC’s 'A-' long-term issuer credit and insurer financial strength ratings to ‘Negative’ from “Stable’ and affirmed all the ratings.
The global credit rating agency said that the ‘Negative’ outlook reflects the ongoing weak operating performance and raised the possibility that it may lower the rating on AAAIC if the company fails to restore its combined ratio to comfortably below 100% in the next two years.
In June 2026, Mr Mohd Mazhar Hamadeh concluded his tenure as CEO of AAAIC. Mr Hamadeh had been with the company for 50 years. The company's board appointed Mr. Ron Bakica as acting chief executive, while looking for a permanent appointment. “We do not believe these management changes will have a material effect on AAAIC's performance,” said S&P.
Middle East war
Referring to the Iran-US war, S&P said, “We expect the geopolitical environment in the Middle East to have no major effect on AAAIC. Thanks to standard war exclusions from most policies, AAAIC should see few claims arising from the developments. In addition, where war risk cover is included--notably for some property, energy, and marine (cargo and hull) covers--AAAIC has effective reinsurance arrangements in place that minimise its net exposure. Consequently, we anticipate that the current developments are likely to translate into slower economic and insurance revenue growth.”
Capitalisation
As for the company’s balance sheet, S&P said that in its view, AAAIC will continue to enjoy robust capitalisation over the next two years, despite its high appetite for real estate investments.
At year-end 2025, AAAIC's capital adequacy significantly exceeded our 99.99% confidence level. S&P anticipates that the company will sustain capital adequacy at this level, thanks to expected net income of AED35m-AED62m per year during 2026-2028. S&P’s base case also assumes a dividend payout of about AED30m per year.
AAAIC has a strong appetite for high-risk assets, with real estate investments comprising 48% of the portfolio at year-end 2025. Moreover, in the first quarter of 2026, AAAIC entered an agreement with a developer to construct a residential building in Dubai, with the intention to sell the development upon completion. “In addition to being illiquid, we consider that this decision further exposes the insurer to the real estate market in Dubai, particularly in the context of the ongoing geopolitical tensions in the region,” S&P said.