Standard & Poor’s (S&P) ratings services has upgraded Arab Orient Insurance Company (AOIC) to ‘A’ with a stable outlook removing the CreditWatch, which indicates the credit quality of a firm's debt.

AOIC had been placed S&P’s CreditWatch on May 13.

The upgrade was a result of a review of Al-Futtaim’s credit strength carried out by the prestigious international ratings agency.

“This is the highest interactive rating awarded to a national insurance company in the UAE and it further endorses our market leading position in the country,” said Omar Elamin, senior managing director, AOIC.

AOIC is the only fully ‘A’ rated insurance company in the UAE and one of only three in the Middle East. The other two companies are based in Saudi Arabia and Qatar.

'We originally placed the ratings on AOIC on CreditWatch with negative implications owing to our concerns about the deterioration in the Dubai economy and the impact of this on the company's owner, the Al-Futtaim group,' explained S&P’s credit analyst Nigel Bond in a statement issued recently from London.

'Following a review of Al-Futtaim’s credit strength, we do not believe that any change in the ratings on AOIC is warranted, as there is negligible likelihood of the group requiring financial support from its insurance subsidiary,' he added.

S&P said its ratings on AOIC reflect the company's strong capitalisation and consistently very strong and stable earnings, accompanied by prudential asset management with very strong liquidity.

Management is a positive rating factor through its prudential risk discipline. These factors are partially offset by AOIC's high use of reinsurance and the concentration risk from banking counterparties.

Bond added: “The stable outlook reflects our expectation that AOIC will maintain strong capitalisation and very strong earnings. The investment profile will remain highly liquid and prudentially focused on bank deposits in securely rated banks.

“The competitive position will remain at least strong in the UAE, and the franchise will expand into neighbouring regions in the medium term with the active support with its owners the Al-Futtaim group.”

Meanwhile, AOIC announced its second quarter results recently, which showed 30 per cent increase in net profit compared to the same period last year where the company has achieved a net profit of Dh105 million ($29.4 million) against Dh81 million. – TradeArabia News Service