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FOR IMMEDIATE RELEASE
LONDON - DECEMBER 10, 2020 09:26 AM (EST)
AM Best has affirmed the Financial Strength Rating of B++ (Good) and the Long-Term Issuer Credit Rating (Long-Term ICR) of “bbb” of Misr Life Insurance Company (MLIC) (Egypt). The outlook of these Credit Ratings (ratings) is stable. MLIC is the life insurance subsidiary of Misr Insurance Holding Company (MIHC) (Egypt).
The ratings reflect MLIC’s balance sheet strength, which AM Best categorises as very strong, as well as its adequate operating performance, neutral business profile and appropriate enterprise risk management. The ratings also factor in the financial strength of MIHC, due to MLIC’s strategic importance to group.
MLIC’s balance sheet strength assessment is underpinned by its risk-adjusted capitalisation at the strongest level, as measured by Best’s Capital Adequacy Ratio (BCAR). The company’s risk-adjusted capitalisation is supported by considerable amounts of soft capital, including discretionary bonus reserves and unrealised gains on its real estate portfolio. AM Best expects MLIC’s BCAR scores to remain comfortably above the minimum required for the strongest assessment, supported by good internal capital generation. Despite the company’s relatively conservative investment allocation by asset class, AM Best considers the quality of assets to be weak given the concentration in Egypt. The balance sheet strength assessment also factors in Egypt’s high economic risk, and very high financial system and political risks.
MLIC has a track record of adequate operating performance, as evidenced by a five-year (2016-2020) weighted average return on equity (ROE) of 15.8%. Overall performance has been improving in recent years, with MLIC reporting a ROE of 21.0% for the year-ended 30 June 2020 (fiscal-year 2020). Underwriting performance continues to contribute positively to the company’s overall profitability, with life results accounting for approximately half of net income over the past five years. AM Best expects that the successful execution of the company’s strategic growth plan will continue to support sustainable operating performance.
MLIC has an excellent business profile in its domestic market. The company’s gross written premium increased by 12.7% during fiscal-year 2020 to EGP 5.1 billion (USD 313.1 million), supporting its market-leading position in Egypt’s life insurance sector with a market share of approximately one-third. Management is proactively pursuing a number of strategic initiatives to enhance its business profile. The company recently entered into a new bancassurance agreement with one of Egypt’s largest banks and is developing its direct sales force to improve its distribution capabilities across the country.
This press release relates to Credit Ratings that have been published on AM Best’s website. For all rating information relating to the release and pertinent disclosures, including details of the office responsible for issuing each of the individual ratings referenced in this release, please see AM Best’s Recent Rating Activity web page. For additional information regarding the use and limitations of Credit Rating opinions, please view Guide to Best’s Credit Ratings. For information on the proper media use of Best’s Credit Ratings and AM Best press releases, please view Guide for Media - Proper Use of Best’s Credit Ratings and AM Best Rating Action Press Releases.
AM Best is a global credit rating agency, news publisher and data provider specialising in the insurance industry. The company does business in more than 100 countries. Headquartered in Oldwick, NJ, AM Best has offices in cities around the world, including London, Amsterdam, Dubai, Hong Kong, Singapore and Mexico City.