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FOR IMMEDIATE RELEASE
LONDON - MARCH 03, 2017 12:11 PM (EST)
A.M. Best has affirmed the Financial Strength Rating of B+ (Good) and the Long-Term Issuer Credit Rating of “bbb-” of Muscat Insurance Company SAOC (MIC) (Oman). The outlook of these Credit Ratings (ratings) remains stable.
The ratings reflect MIC’s strong risk-adjusted capitalisation and track record of good operating performance. The company’s limited business profile in the Oman non-life insurance market is considered a partially offsetting rating factor.
MIC’s risk-adjusted capitalisation continues to be strong and is supported by the company’s low net underwriting leverage. A key driver of the company’s capital consumption is counterparty credit risk, reflective of MIC’s dependence on reinsurance support to underwrite high value commercial risks. Whilst the company’s net written premium (NWP) has increased by an annual compound rate of 32.2% between 2011 and 2015, its risk-adjusted capitalisation has remained strong, and its capital base is expected to remain sufficient to support further portfolio growth.
MIC has a track record of good operating performance. The company reported pre-tax operating profits of OMR 929 thousand in 2015, and interim financial results for 2016 indicate continued sound performance, with a profit before tax of OMR 829 thousand reported for the nine months through September 2016. MIC’s earnings continue to be driven by its technical account, which produced an underwriting surplus of OMR 755 thousand in 2015, underpinned by the motor portfolio, which accounted for over 95% of NWP, and by inward reinsurance commissions from large cessions on commercial lines. Despite increasing loss ratios in the company’s motor portfolio, A.M. Best expects the company to report underwriting profits for full-year 2016.
Despite notable year-on-year growth in gross written premium in 2015 (up 31.6%) and in the first nine months of 2016 (up 8.5% compared with the same period in 2015), MIC maintains a limited business profile in the highly competitive Oman non-life market. Whilst the company continues to expand its footprint and network of branches, A.M. Best expects its business profile to remain limited in Oman.
This press release relates to Credit Ratings 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. For additional information regarding the use and limitations of Credit Rating opinions, please view Understanding Best’s Credit Ratings.
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