Best’s News & Research Service - February 19, 2016 10:08 AM (EST)
A.M. Best Affirms Ratings of Muscat Life Assurance 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 Life Assurance Company SAOC (MLAC) (Oman). The outlook for both ratings remains stable.
The ratings of MLAC reflect its strong risk-adjusted capitalisation and track record of good operating performance. The company’s limited business profile in the Oman insurance market remains an offsetting rating factor. The ratings of MLAC continue to receive rating enhancement from its parent company, Muscat National Holding Company SAOG, reflecting MLAC’s strategic importance to the group.
MLAC maintained strong risk-adjusted capitalisation in 2014, primarily supported by the company’s very low underwriting leverage. As a result, risk-adjusted capitalisation remained commensurate with the rating level despite the notable growth experienced by the company over the full year to December 2014 and over the interim period to September 2015. MLAC’s capital consumption is driven by its real estate holdings in what is an otherwise conservative investment portfolio.
MLAC has demonstrated a track record of good operating performance, realising profits in each of the past five years, despite a substantial decrease in its premium base in 2013 following the loss of a large group credit life account. While MLAC maintained its operating profitability in 2014, reporting pre-tax profits of OMR 412 thousand (USD 1.1 million), it experienced a 12.3% decrease compared to OMR 470 thousand (USD 1.2 million) reported for 2013, driven by deterioration in the loss ratio arising from the company’s rapidly expanding medical portfolio. The continued change in business mix toward medical business has resulted in significant growth over 2015, although the company has experienced a further increase in its loss ratio over the same period.
The company’s limited business profile, which has weakened in recent years as a result of the loss of the group credit life business, continues to be an offsetting rating factor. Whilst MLAC has targeted significant growth in the medium term, principally through its medical and group life portfolios, A.M. Best expects the company’s business profile to remain small. As MLAC grows over the coming years, its limited profile may expose the company to increased levels of volatility in its capital position and operating performance.
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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