Fitch affirms 'AA-' rating of Etihad Credit Insurance with stable outlook

Fitch has affirmed Etihad Credit Insurance’s long-term issuer ratings as “AA-” with a stable outlook based on the UAE export credit agency’s role in supporting the diversification of the country’s economy.

The “AA-” investment grade rating from Fitch signifies the entity's high credit quality and low credit default risk. “ECI’s Insurer Financial Strength (IFS) rating and Long-Term Issuer Default rating (IDR) were both affirmed at 'AA-' [very strong] with stable outlooks,” ECI said on Tuesday. The primary driver for these ratings is “ECI’s strategic governmental function in the promotion of UAE's non-oil exports and strategic sectors' development to achieve the country’s economic agenda”, it said.

ECI’s government ownership, its strong capitalisation with no debt under its capital structure, as well as its prudent investments, strong reinsurance programme and profitable underwriting also contributed to its positive ratings.

“This positive rating reflects the confidence of the international organisations and global rating agencies [in] the UAE … and it also confirms the credit worthiness of the company, the strength of its financial position and its role in enhancing the UAE’s reputation and competitiveness of its exports in the foreign market,” said Abdulla bin Touq, UAE Minister of Economy and chairman of the ECI board.

ECI, which launched operations in 2018, is responsible for supporting the export and re-export of UAE goods and services and foreign investments of local businesses.

The agency is among the central planks of the UAE’s economic diversification agenda and supports exporters through a range of credit, financing and investment insurance products.

Since 2020, it has also started providing credit insurance support to domestic non-oil trade and project financing guarantees to businesses.

ECI has partnerships with local and international banks that offer loans to UAE companies to fund exports to overseas buyers, with the agency providing insurance.

ECI issued 7,936 revolving credit guarantees worth Dh16.6 billion ($4.5bn) in the first nine months of 2022, it said last week. The agency-issued credit guarantees from January until September helped to support non-oil trade for businesses located in the UAE that have exported to 111 countries.

The Fitch ratings “reinforce ECI’s crucial role” in helping the UAE achieve non-oil foreign trade growth of Dh1.053 trillion in the first half of 2022, ECI said.

“By protecting UAE-based companies in the non-oil sector against non-payment, as well as supporting SMEs [small and medium enterprises], ECI has been contributing to a series of national initiatives such as Operation 300bn and Make it in the Emirates, which was launched as part of the Project of the 50,” said Dr Thani Al Zeyoudi, Minister of State for Foreign Trade and deputy chairman of the ECI board.

ECI was assigned the “strong ratings” for the fourth consecutive year, ECI chief executive Massimo Falcioni said. “These favourable ratings help businesses access funds with lower premiums and without having to go through lengthy evaluations by credit facilities,” he said.