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 P.S.C. (OIC) (United Arab Emirates).
The outlook of these Credit Ratings (ratings) is stable.
The ratings reflect OIC’s balance sheet strength, which A.M. Best categorises as very strong, as well as its strong operating performance, neutral business profile and appropriate enterprise risk management.
OIC’s balance sheet strength is underpinned by risk-adjusted capitalisation, which, as measured by Best’s Capital Adequacy Ratio (BCAR), is consistent with the strongest assessment. Furthermore, the balance sheet strength assessment benefits from a conservative investment strategy, low financial leverage and a well-rated reinsurance panel to mitigate its significant reinsurance dependence. A.M. Best expects OIC to actively manage its capital position ensuring its capital base supports future growth plans, sustained by consistent earnings retention and its investment de-risking strategy.
In 2017, the company reported a profit after tax of AED 104.5 million, a 32 per cent increase relative to the prior year (2016: AED 78.9 million). OIC’s improved operating performance was driven primarily by the stronger earnings from its medical line of business, which offset the weaker results arising from its life and commercial lines. However, whilst overall performance trends are developing positively, the persisting volatility on OIC’s technical account raises some concerns, which are exacerbated by the continued impairments of the company’s insurance receivables. A.M. Best notes OIC’s management efforts aimed at addressing these issues and expects remedial actions to translate into improved prospective performance. In the first half of 2018, OIC demonstrated continued improvement in its underwriting performance.
OIC has a leading market position in the UAE, where it stands as the second-largest listed insurance company by gross written premium. In 2017, gross premium revenues grew 4.6 per cent in gross terms, reaching AED 3.7 billion (2016: AED 3.6 billion). Whilst OIC’s business continues to be concentrated in the UAE, it has a diversified underwriting portfolio across life and non-life segments. The company has achieved some geographical diversification, particularly through its Turkish subsidiary, Dubai Starr Sigorta A.S., as well as through its branch operations in Oman and Qatar, and its inward facultative reinsurance business.