LONDON--(BUSINESS WIRE)--A.M. Best has affirmed the Financial Strength Rating of B+ (Good) and the Long-Term Issuer Credit Rating of “bbb-” of Muscat Life Assurance Company SAOC (MLAC) (Oman). The outlook of these Credit Ratings (ratings) remains stable.
The ratings of MLAC reflect the company’s strong risk-adjusted capitalisation and track record of good operating performance. MLAC's very limited business profile in the Oman insurance market remains an offsetting rating factor. The ratings of MLAC receive rating enhancement as a result of its continued strategic importance to the Muscat National Holding Company SAOG group, inclusive of the strength of its affiliated company, Muscat Insurance Company SAOC.
MLAC’s strong risk-adjusted capitalisation is supported by the company’s very low net underwriting leverage, with MLAC’s capital base remaining sufficient to support the company’s growth in underwriting risk in recent years. Despite maintaining a conservative investment portfolio, MLAC’s exposure to real estate has traditionally driven capital consumption. A.M. Best anticipates risk-adjusted capitalisation to have strengthened at year-end 2016, following a reduction in these holdings during the year.
MLAC’s track record of good operating performance has translated into a five-year average (2011-2015) return on equity of 9.2% (as calculated by A.M. Best). The company’s technical performance has been underpinned by its group life business over recent years, which benefits from notable inward reinsurance commissions, and by the profitable run-off of its former credit life business. Whilst MLAC has realised operating profits in each of the past five years, increasing loss ratios on its rapidly expanding medical portfolio have introduced pressure on its technical earnings.
MLAC has a very limited business profile in the Oman life and health insurance segments, which continues to be an offsetting rating factor. The company’s market position weakened materially in 2013 following the loss of a significant group credit life account, and MLAC’s lack of scale may expose the company to increased levels of volatility in its operating performance and capital position. Despite significant growth in its group medical business, A.M. Best expects the company to remain a very small player in a competitive and challenging market.
This press release relates to Credit Ratings that have been published on A.M. 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 A.M. Best’s Recent Rating Activity web page. For additional information regarding the use and limitations of Credit Rating opinions, please view Understanding Best’s Credit Ratings.
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