Standard and Poor’s has lowered their credit rating on United Arab Emirates insurer, Noor Takaful Family, to BB+ with a stable outlook.
The movement comes after the company “marginally underperformed” last year and “significantly eroded it’s capital and liquidity strength”, Standard and Poor’s said.
“Its capital levels, even after the proposed capital injection, are still close to the notional regulatory minimum. In our opinion, Noor’s underperformance and the slowdown in its trading volumes demonstrate that its business development model and competitive position were weaker than we originally considered.”
The ratings agency said that while the company maintains strong liquidity and good financial flexibility, their competitive position and operating performance is not up to scratch. They also said that capitalisation is just ‘adequate’, despite new capital due to be paid at the end of the month.
They predicted that policyholder and shareholder funds are unlikely to achieve a break even this year.
“Although shareholders have provided capital injections to Noor Takaful when necessary, we consider the need for continual support to be an operational weakness,” the ratings agency said. “The scale of the capital erosion suffered in 2011 now causes us to view the management and corporate strategy as a negative factor for the ratings.
“The stable outlook signifies that their capital adequacy and financial flexibility alleviate the pressure on the ratings”
