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FOR IMMEDIATE RELEASE
LONDON - JUNE 21, 2017 01:16 PM (EDT)
A.M. Best has affirmed the Financial Strength Rating of B++ (Good) and the Long-Term Issuer Credit Rating of “bbb” of Arab Misr Insurance Group S.A.E. (GIG-Egypt) (Egypt). The outlook of these Credit Ratings (ratings) is stable.
The ratings of GIG-Egypt reflect the company’s track record of excellent operating profitability, solid level of risk-adjusted capitalisation and good business profile in Egypt’s insurance market. An offsetting rating factor is the company’s concentrated exposure to Egypt. GIG-Egypt’s ratings receive enhancement from its parent company, Gulf Insurance Group K.S.C.P. (GIG), due to the company’s strategic importance to the group.
GIG-Egypt has an excellent track record of generating technical and operating profits despite the challenging economic pressures and intense competition in the domestic market. GIG-Egypt generated a solid combined ratio of 79% in 2016. Technical profitability has been driven by compulsory motor business that has outperformed the market. This was supplemented by strong investment income, as the company benefited from rising interest rates in Egypt. GIG-Egypt has undergone a period of growth in the past seven years in which gross written premium increased to EGP 537 million (USD 61 million) in 2016. The company has a good business profile in Egypt as the third-largest insurer with a market share of 6% of gross written premium.
GIG-Egypt’s risk-adjusted capitalisation is strong, and continues to strengthen through good internal capital generation, with capital requirements largely driven by investment risks. The majority of the company’s investments are held in government treasury bills, with the bulk maturing between three to 12 months. Although this creates concentration risk, it also provides liquidity allowing the company to react to changes in market conditions. Despite the company’s conservative asset portfolio, regulation dictates that all assets are held domestically. GIG-Egypt’s capital position is sufficiently strong to absorb the higher risk charges associated with assets held within Egypt.
Political and financial instability has the potential to disrupt the economic conditions in Egypt. Despite GIG-Egypt’s track record of successfully navigating these challenging market conditions, A.M. Best continues to monitor the impact these external factors may have on the company’s operations.
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. For information on the proper media use of Best’s Credit Ratings and A.M. Best press releases, please view Guide for Media - Proper Use of Best’s Credit Ratings and A.M. Best Rating Action Press Releases.
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