Tuesday 27, December 2016 by Robin AmlĂ´t

A.M. Best affirms Misr Life Insurance ratings

A.M. Best has affirmed the Financial Strength Rating of B++ (Good) and the Long-Term Issuer Credit Rating of “bbb” of Misr Life Insurance Company (Misr Life) (Egypt), a wholly owned subsidiary of Misr Insurance Holding Company. The outlook of these Credit Ratings (ratings) is stable.

The ratings reflect Misr Life’s track record of operating profitability, superior profile in Egypt’s life insurance market, and adequate level of risk-adjusted capitalisation. An offsetting rating factor is the high levels of political, economic and financial system risks associated with operating in Egypt. The ratings also factor in the financial strength of the parent company, as well as Misr Life’s strategic importance and material contribution to the earnings and profile of the group.

Misr Life’s operating profitability has improved notably over the past three years (2014-2016) in comparison with the previous three (2011-2013). Operating profit reached EGP 453 million ($51 million) in 2016 driven by strong underwriting profits, supported by good new business generation and high retention of business. The company also benefits from strong investment returns attributable to the high interest rate environment in Egypt.

During 2016, gross written premium continued to grow, reaching EGP 2.8 billion ($318 million), and the company achieved a five-year average growth rate of 13.4 per cent over the period (2012-2016). The company has a good reputation and an extensive distribution network that affirms their market leading position in Egypt’s life insurance sector, with a share of 42 per cent as of financial year-end 2015. Misr Life’s products are focused on group life and individual endowments; however, the company is currently in the process of launching a number of new strategic initiatives.

Misr Life’s risk-adjusted capitalisation remains adequate, with capital requirements weighted toward asset risk primarily due to the company’s concentration of investments in Egypt and the product mix that contains a large portion of savings products. The company’s balance sheet is enhanced by its real estate portfolio for which market values are significantly higher than its net book value, and benefits from the company’s prudent approach to reserving.

Political and financial instability, as well as social unrest, has the potential to disrupt economic conditions in Egypt. Despite Misr Life’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.

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