Standard & Poor's Ratings Services has revised its outlook on Dubai-based National General Insurance Co. (NGI) to positive from stable. At the same time, the agency affirmed its long-term counterparty credit and insurer financial strength ratings at 'BBB+', CPI  Financial reported.

The outlook revision reflects the view that NGI's financial risk profile will continue to improve, owing to its strengthening capital and earnings and ongoing sales of high-risk assets. This has led us to revise our assessment of NGI's financial risk profile to moderately strong from upper adequate, under our criteria. This, in turn, reflects S&P’s view of NGI's strong capital and earnings, moderate risk position, and adequate financial flexibility.

“We consider NGI's capital position to be supported by extremely strong capital adequacy and exceptional liquidity, which have reduced NGI's investment leverage. We have factored in moderate (6%-8%) growth in premiums over the next three years and gradually improving investment returns before realized gains. We also assume NGI's net combined ratio, the industry's leading underwriting profitability metric, will stay stable at about 85%-90% over the next three years (the lower the combined ratio, the more profitable, and a ratio of more than 100% signifies an underwriting loss).

“We expect that NGI will continue to demonstrate low fundamental earnings volatility, arising from its underwriting results and stable investment income on the back of a supportive economic environment and capital markets. However, the periodic realization of capital gains through asset sales can occasionally inflate published earnings, as was the case in 2013. Our view of NGI's improving financial risk profile is further supported by the gradual planned divestment of some of its high-risk investments, particularly real estate.