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FOR IMMEDIATE RELEASE
LONDON - AUGUST 08, 2014 10:47 AM (EDT)
A.M. Best has affirmed the financial strength rating of A (Excellent) and the issuer credit rating of "a" of Oman Insurance Company P.S.C. (OIC) (United Arab Emirates). The outlook for both ratings remains stable.
The ratings reflect OIC's strong risk-adjusted capitalisation, leading position within the United Arab Emirates (UAE), strong enterprise risk management (ERM) and good operating performance. A partially offsetting rating factor is the execution risk associated with the company's planned expansion strategy.
OIC maintains robust risk-adjusted capitalisation, benefitting from a strong capital base of AED 1.8 billion (USD 482 million) and a panel of well-rated reinsurers. OIC's capitalisation is expected to remain strong through good internal capital generation and by maintaining a sufficient buffer for strategic initiatives over the next few years.
OIC has maintained a leading position in the UAE, with a diversified portfolio across both life and non-life business segments. Whilst OIC's business continues to be concentrated in the UAE, it has achieved some geographical diversification, particularly from its Turkish subsidiary, Dubai Starr Sigorta. In the medium term, OIC is expected to further diversify its revenue streams through strategic expansion into new markets and introducing new products, whilst maintaining a good level of profitability.
In 2013, OIC's overall performance improved for the fourth consecutive year, with net profits increasing to AED 246 million (USD 67 million), driven by strong investment gains that offset the reduction in technical performance. OIC's combined ratio (excluding medical) increased to 96% in 2013 (2012: 89%), due to losses in the aviation and motor business lines. For the first quarter of 2014, OIC has achieved good growth in premium revenue and strong improvement in technical performance following corrective actions taken by management on under-performing business classes.
Following the introduction of new management in 2012, there have been noticeable improvements and strengthening in OIC's ERM. OIC has a comprehensive and integrated risk management framework covering all business units. Along with a well-defined risk appetite statement, the company has developed appropriate tools and processes to identify, measure and manage risks across its business lines. These include internal assessments of capital requirements, catastrophe exposures and counter-party credit risk.
Upward rating movement could occur if OIC is able to successfully grow its regional franchise while maintaining robust profitability. Downward rating pressure could occur if there is a material decline in the company's risk-adjusted capitalisation and/or a prolonged deterioration in underwriting performance.
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.
In accordance with Regulation (EC) No. 1060/2009, the following is a link to required disclosures: A.M. Best Europe - Rating Services Limited Supplementary Disclosure .
A.M. Best Europe - Rating Services Limited is a subsidiary of A.M. Best Company. A.M. Best Company is the world's oldest and most authoritative insurance rating and information source.