AM 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 AM Best assesses 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 its strongest level of risk-adjusted capitalisation, as measured by Best’s Capital Adequacy Ratio (BCAR). AM Best expects prospective BCAR scores to remain comfortably in excess of the minimum required for the strongest level assessment, as the company actively manages its capital position, ensuring its capital base supports its business plans. The company’s balance sheet strength is supported by its conservative investment portfolio, excellent liquidity and prudent reserving practices. An offsetting factor is OIC’s high level of reinsurance dependence, albeit not as significant as other regional peers, with low retention across many lines of business. This is partially mitigated by a panel of reinsurers of high credit quality.
OIC has a track-record of strong operating performance, demonstrated by a 10-year (2011-2020) weighted return-on-equity (ROE) ratio of 8.2%. The company reported a profit after tax of AED 196.5 million (USD 53.5 million) for 2020, an increase of 3% from the prior year, which translated to an ROE of 9.9%. Underwriting performance improved from 2019 with the company benefitting from the removal of certain loss making accounts and increased retention of profitable business in line with its risk appetite. The overall impact of the COVID-19 pandemic on OIC’s underwriting performance for 2020 was broadly neutral with favourable claims experience on the company’s motor line of business offset by higher claims in its medical portfolio. OIC’s investment performance improved in 2020 with the company continuing to benefit from an increase in its free cash flows generated from the robust credit management strategy. AM Best expects operating performance to remain strong prospectively, supported by disciplined underwriting and stable investment results.
OIC has a market leading position in the UAE, where it ranks as the third largest insurance company by gross written premium. In 2020, the company’s gross premium revenues increased marginally to AED 3.6 billion (2019: AED 3.5 billion) despite challenging market conditions. Whilst OIC’s business continues to be concentrated in the UAE, it is well-diversified by line of business across the life and non-life segments. Geographic concentration in the UAE is expected to reduce slowly as the company prudently expands its international facultative business.
This press release relates to Credit Ratings that have been published on AM 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 AM Best’s Recent Rating Activity web page. For additional information regarding the use and limitations of Credit Rating opinions, please view Guide to Best’s Credit Ratings. For information on the proper media use of Best’s Credit Ratings and AM Best press releases, please view Guide for Media - Proper Use of Best’s Credit Ratings and AM Best Rating Action Press Releases.
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Barnaby Unwin Hoskins
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Manager, Public Relations
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Jessica Botelho-Young, CA
Associate Director, Analytics
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+1 908 439 2200, ext. 5644