A.M. Best Affirms βAβ rating of Oman Insurance Company
A.M. Best has affirmed the Financial Strength Rating of A (Excellent) and the Long-Term Issuer Credit Rating of “a” of Oman Insurance Company (OIC) (United Arab Emirates). The outlook of these Credit Ratings (ratings) remains stable.
The ratings reflect OIC’s strong risk-adjusted capitalisation and leading market position within the United Arab Emirates (UAE). A partially offsetting rating factor is the volatility observed in the company’s operating performance in recent years.
OIC’s risk-adjusted capitalisation remained strong in 2016. The company has a diversified risk profile, which is supported adequately by a strong capital base of AED 1.9 billion. 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. A.M. Best expects OIC’s risk-adjusted capitalisation to remain strong, and supportive of the company’s future strategic initiatives. OIC’s balance sheet strength is further supported by low debt leverage and excellent liquidity.
A partially offsetting rating factor is the volatility observed in OIC’s operating performance in recent years, with profit before tax standing at AED 85.4 million in 2016, compared with AED 224.8 million in 2014. However, A.M. Best notes that OIC’s technical performance improved notably in 2016, driven by management actions taken to turn around underperforming business segments through rate increases and enhanced risk selection. In 2016, the company’s non-life combined ratio, as calculated by A.M. Best, improved to 87 per cent from 96 per cent in 2015. In the first half of 2017, OIC has demonstrated continued good underwriting performance, in line with A.M. Best’s expectations.
OIC has a leading market position in the UAE as the largest listed insurance company by gross written premium, which reached AED 3.6 billion in 2016, representing growth of 11.5 per cent (2015: AED 3.2 billion). Whilst OIC’s business continues to be concentrated in the UAE, it has a diversified underwriting portfolio across life and non-life segments, and has achieved some geographical diversification, particularly through its Turkish subsidiary, Dubai Starr Sigorta, as well as through its branch operations in Oman and Qatar, and its inward facultative reinsurance business.