AM Best revises outlook to negative for Al Ittihad Al Watani


LONDON–(COMMERCIAL THREAD) –AM Best revised the outlook from stable to negative and confirmed the financial strength rating of B + (good) and the long-term issuer credit rating of “bbb-” (good) by Al Ittihad Al Watani (The Union National) Societe Generale D’Assurances du Proche Orient, sal (Al Ittihad) (Lebanon).

These credit ratings (ratings) reflect the strength of Al Ittihad’s balance sheet, which AM Best considers to be very strong, as well as its adequate operational performance, limited business profile and marginal management of corporate risks.

The revised outlook to negative reflects the pressure on Al Ittihad’s credit quality resulting from the impact of the deteriorating economic, political and financial conditions in Lebanon. Although the majority of its business is underwritten in the United Arab Emirates, Al Ittihad is exposed to the increased level of country risk associated with Lebanon as it is its country of domicile and part of its assets are located in the country. In addition, its parent company, Nasco Insurance Group Limited (NIG), has significant exposure in Lebanon through various insurance and brokerage operations.

The strength of Al Ittihad’s balance sheet is underpinned by a risk-adjusted capitalization that is well above the minimum level required for the strongest valuation, as measured by the capital adequacy ratio (BCAR) of Best, after adjustments made to reflect the increased risks associated with its Lebanese assets (around a quarter of Al Ittihad’s investments expected at the end of 2020). The balance sheet strength assessment also takes into account the company’s very liquid and prudent investments held in the United Arab Emirates, which make up the majority of its investment portfolio.

Al Ittihad’s operational performance has improved significantly since 2017 thanks to management actions, including liquidating the company’s Lebanese portfolio and focusing on its profitable operations in the United Arab Emirates. AM Best expects potential operational performance to remain adequate throughout the underwriting cycle, supported by continued profitability in the UAE. However, the company is expected to report a significant loss for 2020 due to a monetary loss on balance sheet restatements related to the application of IAS 29 – Financial Reporting in Hyperinflationary Economies.

Al Ittihad’s business profile assessment reflects its market position as an intermediary player in the highly competitive UAE market, as well as its strong distribution capabilities, leveraging its parent company’s brokerage network. . Al Ittihad recorded gross written premiums of £ 95.8 billion (US $ 63.2 million) in 2020 and has benefited from increased diversification by industry since the transfer of the established portfolios of distributed activities from NIG in the United Arab Emirates to the company in 2017.

This press release relates to credit ratings published on the AM Best website. For all rating information relating to the publication and relevant disclosures, including details of the office responsible for issuing each of the individual ratings referenced in this publication, please see AM Best’s Recent Rating Activity webpage. . For more information on the use and limitations of credit rating reviews, please see Best’s Guide to Credit Ratings. For more information on the proper use of Best Credit Ratings, Best Preliminary Credit Ratings, and AM Best press releases, please see the Guide to Appropriate Use of Best Ratings and Reviews.

AM Best is a global credit rating agency, news publisher, and data analytics provider specializing in the insurance industry. Based in the United States, the company operates in more than 100 countries with regional offices in London, Amsterdam, Dubai, Hong Kong, Singapore and Mexico City. For more information, visit

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