Best’s News & Research Service - February 19, 2016 10:07 AM (EST)
A.M. Best Affirms Ratings of Muscat Insurance Company SAOC
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 remains stable.
The ratings reflect MIC’s strong risk-adjusted capitalisation and track record of good operating performance. Partially offsetting these rating factors is the company’s limited business profile in the Oman non-life insurance market.
MIC’s risk-adjusted capitalisation continues to be strong and is supported by the company’s low underwriting leverage and conservative investment portfolio. MIC’s capital consumption remains primarily driven by counterparty credit risk, in part reflective of the company’s dependence on reinsurance support for high value commercial risks. Whilst the reinsurance panel is largely well-rated, capital volatility can arise in the event of large losses. A.M. Best expects MIC’s prospective risk-adjusted capitalisation to remain supportive of the company’s forecast growth over the medium term.
MIC has demonstrated a track record of good operating performance, with consistent profits generated over the past five years. The company reported pre-tax operating profits of OMR 835 thousand (USD 2.2 million) for 2014, realising a 29.7% increase on 2013; interim financial results for 2015 indicate continued operating profitability, reporting operating profit before tax of OMR 840 thousand (USD 2.2 million) at September 2015. The company’s operating performance is underlined by stable investment returns and strong underwriting results, with an excellent five-year average combined ratio of 74.1%.
Partially offsetting these rating factors is the company’s limited business profile, where the highly competitive domestic market has placed pressure on MIC’s market profile. Given the challenging operating environment, MIC’s gross written premium declined 11.9% over 2014, however, the company continued to grow on a net basis. The company’s profile remained stable during 2015, realising growth in gross and net written premium, with the company’s expanding distribution network driving growth in the motor portfolio.
This press release relates to rating(s) that have been published on A.M. 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 A.M. Best’s Recent Rating Activity web page.
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