A.M. Best this week moved Abu Dhabi National Takaful Co. (ADNTC) from stable to positive with a financial strength rating of B++.
ADNTC’s solid risk adjusted capitalization and track record of excellent underwriting processes are reflected in the new ratings. These positive factors were partially offset by an accumulated deficit within the policyholders’ fund and a modest, albeit growing, business profile.
The revised outlook reflects ADNTC’s improved balance of earnings between policyholder and shareholder funds and enhanced enterprise risk management.
“ADNTC has demonstrated a track record of excellent underwriting performance with a five-year average combined ratio (adjusting wakala fees for actual expenses) of 80 percent, with most business segments producing strong operating results,” ADNTC’s Sara Absi said.
In 2014, ADNTC carried out a detailed review of its wakala fee structure and subsequently reduced its wakala fees by approximately 33 percent compared to 2013. This improved the balance of earnings between policyholders’ fund and shareholder funds, resulting in a policyholders’ surplus in 2014 that was offset against the accumulated Qard Hassan.
