Best’s News & Research Service - February 13, 2015 09:41 AM (EST)
A.M. Best Affirms Ratings of Muscat Insurance Company SAOC
- February 13, 2015 09:41 AM (EST)
London //BestWire// - A.M. Best has affirmed the financial strength rating of B+ (Good) and the issuer credit rating of "bbb-" of Muscat Insurance Company SAOC (MIC) (Oman). The outlook for both ratings is stable.
The ratings of MIC reflect its strong risk-adjusted capitalisation and track record of good operating performance. An offsetting rating factor remains the company's limited business profile in the Oman insurance market.
MIC's risk-adjusted capitalisation remains strong and is expected to be supportive of the company's projected growth over the medium term. The company's capital position benefits from low underwriting leverage, a conservative investment portfolio and a reinsurance panel of good credit quality.
The company has demonstrated a track record of good pre-tax operating results, evidenced by profits in each of the last five reported years (2009-2013). A pre-tax profit of OMR 0.6 million (USD 1.7 million) was reported in 2013, with a profit of similar magnitude expected for 2014. Consistently profitable earnings reflect both strong underwriting performance, as well as stable investment income from the company's conservative investment portfolio. The company has achieved a five-year average combined ratio of 78.7% (2009-2013).
MIC has a limited business profile in the Oman non-life insurance market. The company was ranked 11th, based on gross written premiums in 2013, equating to a 3% market share. MIC is expected to have approximately OMR 9.5 million (USD 25.0 million) of gross written premiums in 2014, compared with OMR 10.7 million in 2013 (USD 27.9 million). Whilst the company is anticipating double-digit premium growth annually, over the next three years, the Oman insurance market remains highly competitive.
Positive rating actions may arise if the company can achieve a stronger business profile whilst maintaining robust earnings. Negative rating actions may arise if the company experiences a prolonged deterioration in operating performance or if risk-adjusted capitalisation was to fall materially.
The methodology used in determining these ratings is Best's Credit Rating Methodology, which provides a comprehensive explanation of A.M. Best's rating process and contains the different rating criteria employed in the rating process. Best's Credit Rating Methodology can be found at www.ambest.com/ratings/methodology.
Key insurance criteria reports utilised:
- Catastrophe Analysis in A.M. Best Ratings
- Evaluating Country Risk
- Rating Members of Insurance Groups
- Risk Management and the Rating Process for Insurance Companies
- Understanding Universal BCAR
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