AM Best


A.M. Best Affirms Ratings of Oman Insurance Company P.S.C.


CONTACTS:

Salman Siddiqui, ACA
Senior Financial Analyst
+44 20 7397 0311
salman.siddiqui@ambest.com

Mahesh Mistry
Director, Analytics
+44 20 7397 0325
mahesh.mistry@ambest.com
Christopher Sharkey
Manager, Public Relations
+1 908 439 2200, ext. 5159
christopher.sharkey@ambest.com

Jim Peavy
Assistant Vice President, Public Relations
+1 908 439 2200, ext. 5644
james.peavy@ambest.com

FOR IMMEDIATE RELEASE

LONDON - AUGUST 19, 2016 10:32 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 each rating remains stable.

The ratings reflect OIC’s strong risk-adjusted capitalisation and leading position within the United Arab Emirates (UAE). An offsetting rating factor is the company’s declining operating performance during 2015.

OIC’s strong balance sheet is supported by excellent risk-adjusted capitalisation, a very low level of borrowings and excellent liquidity. Furthermore, the company’s stable and diversified risk profile is adequately supported by a strong capital base of AED 1,883 million (USD 513 million). OIC actively manages its capital requirements as evidenced by its track record of de-risking its investment portfolio to focus on its core underwriting strategies. OIC’s capital position 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 a leading position in the UAE, with a diversified portfolio across 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 A.S. In the medium term, OIC is expected to further diversify its revenue streams by introducing new products and developing its inward facultative portfolio, whilst remaining focused on protecting its leading position in the local insurance market.

Whilst OIC historically has delivered robust earnings across its business lines, the company’s technical profits declined significantly in 2015 to AED 4 million (USD 1 million). The decline in underwriting results stems primarily from the company taking a large bad-debt write-off, along with an increase in attritional losses in the company’s medical portfolio. Furthermore, lower technical returns were exacerbated by a reduced level of fair value gains on its real estate portfolio, with the company suffering realised investment losses during the year. Reduced earnings from its insurance and investment activities translated into a 65% decline in profits after tax to AED 81 million (USD 22 million). A.M. Best recognises the positive impact of the company’s medical remedial programme adopted in 2015, as well as the targeting of profitable market segments, to improve underwriting performance. For the first half of 2016, OIC has demonstrated an improvement in its underwriting performance.

OIC’s prudent management of its operations also has meant that there has been no financial impact from the new insurance regulations imposed by the Insurance Authority.

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.

A.M. Best is the world’s oldest and most authoritative insurance rating and information source.


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