AM Best has revised the outlooks to stable from negative and affirmed the Financial Strength Rating of B++ (Good) and the Long-Term Issuer Credit Rating of “bbb” (Good) of Al Fujairah National Insurance Company PJSC (AFNIC) (United Arab Emirates) [UAE].

The Credit Ratings (ratings) reflect AFNIC’s balance sheet strength, which AM Best assesses as strong, as well as its adequate operating performance, limited business profile and appropriate enterprise risk management (ERM). The ratings also reflect enhancement from AFNIC’s majority shareholder, the Government of Fujairah – Department of Industry and Economy, which holds in excess of 80% of AFNIC’s shareholdings. The Government of Fujairah has demonstrated capital support to AFNIC through capital injections and accumulation of capital at AFNIC through bonus shares in lieu of cash distributions.

The revision of the outlooks to stable reflects steady improvements in AFNIC’s ERM function and risk management capabilities. This has been evidenced through measures taken to formalise the ERM framework, strengthen capitalisation through the partial de-risking of the investment portfolio and underwriting initiatives aimed at improving operating performance metrics.

AFNIC’s balance sheet strength is underpinned by risk-adjusted capitalisation, as measured by Best’s Capital Adequacy Ratio (BCAR), which was at the very strong level at year-end 2024. BCAR scores have shown improvement in comparison to last year, following actions taken to enhance the company’s balance sheet, primarily through the partial de-risking of its investment portfolio. Despite these actions, AFNIC’s equity portfolio remains largely concentrated to a single strategic holding, which keeps investment risk elevated.

AFNIC’s operating performance assessment has been revised to adequate from strong following several years of negative underwriting results coupled with challenging operating conditions in the UAE market. Following remedial actions, including premium rate increases and the launch of a new medical product, AFNIC’s underwriting performance improved for the first six months of 2025. Although the motor segment continues to be under-performing, management expects underwriting conditions for the motor segment to improve in the near to intermediate term. Operating performance continues to be supported by positive albeit volatile investment returns.

The limited business profile assessment reflects AFNIC’s modest market position and significant geographic concentration. AFNIC’s operations are concentrated in the competitive and highly fragmented UAE non-life insurance market, where it writes a small share of total market premiums. The company maintains a unique position in the market, benefitting from preferential access to government originated business in the Emirate of Fujairah. AFNIC reported growth of 49% in insurance service revenue to AED 421 million in 2024, driven primarily by growth in the medical segment.

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