Best’s News & Research Service - April 27, 2022 08:05 AM (EDT)
AM Best Affirms Credit Ratings of Oman Insurance Company P.S.C.
- April 27, 2022 08:05 AM (EDT)
London //BestWire// - AM Best has affirmed the Financial Strength Rating of A (Excellent) and the Long-Term Issuer Credit Rating of “a” (Excellent) of Oman Insurance Company P.S.C. (OIC) (United Arab Emirates). The outlook of these Credit Ratings (ratings) is stable.
The ratings reflect OIC’s balance sheet strength, which AM Best assesses as very strong, as well as its strong operating performance, neutral business profile and appropriate enterprise risk management.
OIC’s balance sheet strength is underpinned by its strongest level of risk-adjusted capitalisation, as measured by Best’s Capital Adequacy Ratio (BCAR). AM Best expects prospective BCAR scores to remain comfortably in excess of the threshold required for a strongest assessment. The company’s balance sheet strength is supported by prudent reserving practices, good financial flexibility and its conservative investment portfolio, relative to regional peers, which results in excellent liquidity. An offsetting factor is OIC’s high level of reinsurance dependence, albeit not as significant as other regional peers, with low retention across some lines of business. This is partially mitigated by a panel of reinsurers of high credit quality.
OIC reported a profit after tax of AED 206.1 million in 2021, equivalent to a return-on-equity ratio (ROE) of 9.6%. Non-life technical earnings and investment returns remain the material drivers of OIC’s profits. OIC reported a non-life combined ratio (as calculated by AM Best) of 94.2% for 2021. ROEs and combined ratios have shown a significant improvement since 2018, averaging 10.0% and 92.6%, respectively, over the three-year period 2019-2021. OIC’s prospective performance is expected to benefit from the acquisition, subject to regulatory approvals, of Assicurazioni Generali S.p.A.’s UAE life insurance portfolio, providing the company with additional fee income and partially reducing the dependence on non-life earnings and investment returns. The transaction is also expected to benefit OIC’s presence in the domestic life insurance market.
OIC has a market leading position in the UAE, where it ranks as the third-largest insurance company by gross written premium and the largest by net earned premium, reflecting its relatively high retention against peers. The company’s underwriting portfolio remains concentrated in the domestic market, although the company continues to grow its international corporate lines book. Furthermore, OIC’s recent launch of its Lloyd’s syndicate-in-a-box is considered beneficial for its brand and profile as well as providing a source of geographic diversification over the longer term as the platform is scaled, although execution risk exists.
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 use of Best’s Credit Ratings, Best’s Performance Assessments, Best’s Preliminary Credit Assessments and AM Best press releases, please view Guide to Proper Use of Best’s Ratings & Assessments.
AM Best is a global credit rating agency, news publisher and data analytics provider specialising in the insurance industry. Headquartered in the United States, the company does business in over 100 countries with regional offices in London, Amsterdam, Dubai, Hong Kong, Singapore and Mexico City.