A.M. Best Removes from Under Review Negative and Affirms the Ratings for Misr Insurance Company

OLDWICK, N.J.--(BUSINESS WIRE)--A.M. Best Co. has removed from under review with negative implications and affirmed the financial strength rating of A- (Excellent) and the issuer credit rating to “a-” of Misr Insurance Company (Misr) (Egypt). A negative outlook has been assigned to both ratings.

The negative outlook reflects Misr’s continued reserve strengthening during 2008, impacting its non-life technical performance driven by its motor compulsory account. Offsetting these factors is its solid risk-adjusted capitalisation and its leading business position in the Egyptian insurance market.

Misr has undergone significant restructuring over the past year, following the merger with Al Chark Insurance Company and The Egyptian Insurance Company. The company has experienced additional reserve strengthening during 2008 (further to 2007), with reserves increasing by EGP 850 million (USD 156 million) due to reserves deficiencies relating to its historic compulsory motor business. Technical performance has suffered as a result, with a loss ratio in excess of 100% for 2008. A.M. Best believes the company’s non-life technical results will improve in the short term, given the changes in regulation in Egypt, in particular on compulsory motor where rates have increased 250% and an upper limit on liability claims enforced. Moreover, the company has experienced relatively good performance on its remaining portfolio, which is expected to result in a dramatically improved overall loss ratio below 100% by financial year-end 2009. In A.M. Best’s opinion, the company will be reliant on investment income to remain profitable over the next two years.

A.M. Best’s believes that Misr’s prospective risk-adjusted capitalisation is expected to remain solid, with the company benefiting from significant increases in market values (in excess of book values) for its equity and real estate portfolios. Additionally, the company is supported by a strong retrocession programme, in particular on its riskier insurance lines, which are placed with high quality reinsurers. The company has consolidated its position as the leading insurer for both life and non-life insurance, with a market share of gross premiums of 50% and 60%, respectively.

For Best’s Ratings, an overview of the rating process and rating methodologies, please visit www.ambest.com/ratings.

Founded in 1899, A.M. Best Company is a global full-service credit rating organization dedicated to serving the financial and health care service industries, including insurance companies, banks, hospitals and health care system providers. For more information, visit www.ambest.com.