DUBAI (S&P Global Ratings) July 29, 2020–S&P Global Ratings today said that Dubai-based Orient Insurance P.J.S.C. (A/Stable/–) reported stronger-than-expected gross written premium (GWP) growth and higher net earnings in the first six months of 2020, despite the pandemic and lower oil prices. Orient’s GWP increased 13.6% to about UAE dirham (AED) 2.56 billion (about $700 million) in the first half of 2020 from about AED2.25 billion during the same time in 2019. This resulted from the company’s expansion across all business lines, despite a lockdown for several weeks during this period.

At the same time, the company’s total profit improved to AED282.3 million from AED270.3 million, mainly thanks to strong operating performance as a result of fewer claims and cost savings from the company’s ongoing digital transformation. The use of digital channels enabled Orient to consolidate the operations of seven branches in the United Arab Emirates (UAE). Although, in line with our expectations, Orient reported a modest decline in investment income, mainly due to a decline in interest rates and unrealized losses on equity investments, the company’s investments were still profitable.

Shareholders’ equity increased to AED3.2 billion as of midyear 2020 from AED2.9 billion at midyear 2019. Orient is the largest insurer (measured by GWP) in the UAE and has also consistently been the most profitable and well capitalized, supporting our ‘A’ ratings on the entity.

As a result of weak economic conditions in the UAE, we anticipate that Orient’s GWP growth will moderate to about 10% for the full year 2020, while net profit will exceed AED425 million, despite ongoing volatility in equity markets.