LONDON--(BUSINESS WIRE)--AM Best has affirmed the Financial Strength Rating of B++ (Good) and the Long-Term Issuer Credit Rating (Long-Term ICR) of “bbb” of Misr Life Insurance Company (MLIC) (Egypt). The outlook of these Credit Ratings (ratings) is stable. MLIC is the life insurance subsidiary of Misr Insurance Holding Company (MIHC) (Egypt).
The ratings reflect MLIC’s balance sheet strength, which AM Best categorises as very strong, as well as its adequate operating performance, neutral business profile and appropriate enterprise risk management. The ratings also factor in the financial strength of MIHC, due to MLIC’s strategic importance to group.
MLIC’s balance sheet strength assessment is underpinned by its risk-adjusted capitalisation at the strongest level, as measured by Best’s Capital Adequacy Ratio (BCAR). The company’s risk-adjusted capitalisation is supported by considerable amounts of soft capital, including discretionary bonus reserves and unrealised gains on its real estate portfolio. AM Best expects MLIC’s BCAR scores to remain comfortably above the minimum required for the strongest assessment, supported by good internal capital generation. Despite the company’s relatively conservative investment allocation by asset class, AM Best considers the quality of assets to be weak given the concentration in Egypt. The balance sheet strength assessment also factors in Egypt’s high economic risk, and very high financial system and political risks.
MLIC has a track record of adequate operating performance, as evidenced by a five-year (2016-2020) weighted average return on equity (ROE) of 15.8%. Overall performance has been improving in recent years, with MLIC reporting a ROE of 21.0% for the year-ended 30 June 2020 (fiscal-year 2020). Underwriting performance continues to contribute positively to the company’s overall profitability, with life results accounting for approximately half of net income over the past five years. AM Best expects that the successful execution of the company’s strategic growth plan will continue to support sustainable operating performance.
MLIC has an excellent business profile in its domestic market. The company’s gross written premium increased by 12.7% during fiscal-year 2020 to EGP 5.1 billion (USD 313.1 million), supporting its market-leading position in Egypt’s life insurance sector with a market share of approximately one-third. Management is proactively pursuing a number of strategic initiatives to enhance its business profile. The company recently entered into a new bancassurance agreement with one of Egypt’s largest banks and is developing its direct sales force to improve its distribution capabilities across the country.
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