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FOR IMMEDIATE RELEASE
LONDON - DECEMBER 09, 2022 10:45 AM (EST)
AM Best has removed from under review with positive implications and upgraded the Financial Strength Rating to A- (Excellent) from B++ (Good) and the Long-Term Issuer Credit Rating to “a-” (Excellent) from “bbb+” (Good) of National Life and General Insurance Company SAOG (NLGIC) (Oman). The outlook assigned to these Credit Ratings (ratings) is stable.
The ratings reflect NLGIC’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.
These rating actions follow the completion of the acquisition by NLGIC of Royal & Sun Alliance Insurance (Middle East) Limited B.S.C. (c) (RSA Middle East). In AM Best’s view, the acquisition has strengthened NLGIC’s business profile, providing both product and geographical diversification, as well as consolidating NLGIC position in its existing markets.
NLGIC’s balance sheet strength is underpinned by its risk-adjusted capitalisation at the strongest level, as measured by Best’s Capital Adequacy Ratio (BCAR). The acquisition of RSA Middle East is expected to have limited impact on NLGIC’s risk-adjusted capitalisation, with the company’s BCAR expected to remain at the strongest level, supported by good internal capital generation. NLGIC’s balance sheet strength benefits from a conservative investment portfolio by asset type and good level of liquidity, which are expected to be little changed following the acquisition. While the transaction has increased the geographical diversification of the company’s asset base, a partially offsetting factor is the concentration of the company’s assets in the Gulf Cooperation Council region, which has the potential to introduce volatility to its capital base.
NLGIC has a track record of strong operating profitability, demonstrated by a five-year (2017-2021) weighted average return-on-equity ratio of 17.7%. Historical operating profitability has been driven by strong underwriting results from the non-life portfolio, evidenced by a five-year (2017-2021) weighted average combined ratio of 92.6%. Operating performance is expected to deteriorate moderately in 2022, reflecting the lower technical profitability of RSA Middle East’s book of business, but to remain supportive of a strong assessment over the economic cycle, benefiting from management actions to rationalise the portfolio. Investment performance is expected to remain a modest, albeit stable, contributor to net results, reflective of the company’s relatively conservative investment allocation.
NLGIC is deemed to have a well-diversified profile by product and geography following the acquisition of RSA Middle East. The business profile assessment factors in the company’s leading market position in Oman, its presence in the United Arab Emirates, Saudi Arabia, Bahrain and Kuwait, as well as its planned expansion into Qatar.
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.