SALAMA/Islamic Arab Insurance Co. (P.S.C.)

Largest Takaful player in the United Arab Emirates (UAE). Largest portfolio of life products among local peers. Very strong capital adequacy. Volatile operating performance with major losses from 2014-2015 UAE motor portfolio and Best Re. Investments in high-risk assets i.e., real estate, equity and speculative-grade bonds and deposits. Borderline liquidity, though now improving. S&P Global Ratings' issuer credit rating on SALAMA/Islamic Arab Insurance Co. (P.S.C.) (SALAMA) reflects its position as the largest sharia-compliant insurer in the UAE, combined with very strong risk-based capital adequacy, but constrained by weak operating performance and a relatively high-risk investment portfolio. SALAMA's earnings have remained volatile during the past two years, owing to major losses from its motor portfolio in the UAE and Best Re,

...S&P Global Ratings' issuer credit rating on SALAMA/Islamic Arab Insurance Co. (P.S.C.) (SALAMA) reflects its position as the largest sharia-compliant insurer in the UAE, combined with very strong risk-based capital adequacy, but constrained by weak operating performance and a relatively high-risk investment portfolio. SALAMA's earnings have remained volatile during the past two years, owing 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 property/casualty (P/C) gross written premiums (GWP) dropped by 46% in 2016. GWP from Algeria, Egypt, and Senegal in turn have risen as a percentage of total premium income, thereby exposing the group to more industry and country risk. While SALAMA's management considers the drop in UAE business as temporary, the interim...

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