S&P has affirmed its long-term counterparty credit and financial strength ratings on Salama/Islamic Arab Insurance at ‘BBB-‘. The outlook is negative. Salama’s earnings have remained volatile during the past two years due to major losses from its motor portfolio in the UAE and Best Re, its subsidiary that is currently in run-off.
While Salama has taken corrective measures since the beginning of 2016 by materially reducing the UAE motor portfolio and by making changes in senior management, the group’s non-life-related gross written premiums in the UAE dropped by 46 per cent in 2016 to $57m from AED391m in 2015. This in turn has caused gross premiums from Algeria, Egypt, and Senegal to rise as a percentage of total premium income, thereby exposing the group to more industry and country risk.