LONDON--(BUSINESS WIRE)--AM Best has revised the outlooks to stable from negative and 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) (UAE).
The ratings reflect OIC’s balance sheet strength, which AM Best categorises as very strong, as well as its strong operating performance, neutral business profile, and appropriate enterprise risk management. The revision of the outlooks to stable follows the strong corrective actions implemented by management on insurance and investment operations and AM Best’s expectation that these actions will lead to sustained strong performance.
These actions, which began in 2018, included the company’s increased focus on underwriting discipline, a strengthening of credit control procedures, and a de-risking of its invested asset portfolio. As a result of these actions, OIC delivered strong operating results in 2019, with the return on equity improving to 10.6%, from 0.5% in 2018. Furthermore, the company has implemented an expense savings initiative, which is expected to benefit the expense ratio over the next few years.
OIC’s balance sheet strength is underpinned by its strongest level of risk-adjusted capitalisation, as measured by Best’s Capital Adequacy Ratio (BCAR). In 2019, the company strengthened its balance sheet through the full repayment of external borrowings and a material reduction in overdue debtor balances. The balance sheet strength assessment benefits from the company’s conservative investment strategy, which was de-risked further in 2019 following the sale of holdings in unlisted equities in 2019. AM Best expects OIC to actively manage its capital position, ensuring its capital base supports its business plans.
OIC has a leading market position in the UAE, where it ranks as the third largest listed insurance company by gross written premium. In 2019, gross premium revenues decreased marginally to AED 3.5 billion (2018: AED 3.7 billion) as part of the group’s portfolio clean-up strategy. Whilst OIC’s business continues to be concentrated in the UAE, it has a diversified underwriting portfolio by line of business across the life and non-life segments, and through its international facultative business.
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