Research Update: UAE-Based SALAMA/Islamic Arab Insurance Co. 'BBB' Ratings Remain On CreditWatch Negative

SALAMA's financial accounts continue to have three audit qualifications regarding the valuation and ownership of certain assets. If these assets are significantly or fully impaired, SALAMA's capital adequacy could weaken materially in our risk-based model. As a result of the qualified assets, SALAMA's regulatory solvency is also below the required minimum, although there was a significant improvement in its solvency position during the first half of 2022 compared with that at year-end 2021. SALAMA recently announced a potential merger with Takaful Emarat and its acquisition of business from another local insurer, which we believe could also exert pressure on the capital adequacy of the merged entity under our risk-based model. We have therefore kept our 'BBB' ratings on SALAMA on

...- SALAMA's financial accounts continue to have three audit qualifications regarding the valuation and ownership of certain assets. If these assets are significantly or fully impaired, SALAMA's capital adequacy could weaken materially in our risk-based model. - As a result of the qualified assets, SALAMA's regulatory solvency is also below the required minimum, although there was a significant improvement in its solvency position during the first half of 2022 compared with that at year-end 2021. - SALAMA recently announced a potential merger with Takaful Emarat and its acquisition of business from another local insurer, which we believe could also exert pressure on the capital adequacy of the merged entity under our risk-based model. - We have therefore kept our '###' ratings on SALAMA on CreditWatch negative, where they were placed on July 26, 2021. - We expect to resolve the CreditWatch after our concerns relating to the audit qualifications, regulatory solvency deficit, and potential...

Research Update