LONDON--(BUSINESS WIRE)--AM Best has affirmed the Financial Strength Rating of B++ (Good) and the Long-Term Issuer Credit Rating of “bbb+” (Good) of National Life and General Insurance Company SAOG (NLGIC) (Oman). The outlook of these Credit Ratings (ratings) is stable.
The ratings reflect NLGIC’s balance sheet strength, which AM Best assesses as very strong, as well as its strong operating performance, limited business profile and appropriate enterprise risk management.
NLGIC’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), and benefits from a conservative investment strategy and a reinsurance panel of good credit quality. The balance sheet strength assessment also factors in the company’s good level of liquidity and absence of financial leverage. A partially offsetting rating factor is the concentration of the company’s assets to the Gulf Cooperation Council region, particularly Oman. The company’s balance sheet strength assessment also takes into account the economic, political and financial system risks associated with the United Arab Emirates (UAE) and Oman, where the company operates.
NLGIC has a track record of strong operating performance, as evidenced by a five-year (2016-2020) weighted average return-on-equity ratio of 18.8%. The company’s earnings are attributable primarily to the solid underwriting returns from its non-life portfolio, which translated in a five-year weighted average combined ratio of 92.1%. NLGIC’s 2020 technical results benefited from a reduction in claims frequency driven by the governmental restrictions imposed in response to the COVID-19 pandemic, in particular, on its primary medical and motor lines of business. AM Best expects NLGIC’s investment returns to remain modest, reflecting a conservative investment portfolio, although yields should increase moderately, as the company shifts part of its cash holdings to fixed-income securities.
NLGIC has a concentrated underwriting portfolio, with medical business accounting for over 80% of gross written premium. The company is the leading medical underwriter in Oman and has an established presence in the UAE. AM Best considers NLGIC as well-positioned to benefit from the introduction of mandatory medical insurance in Oman, which is due to be implemented during 2021 and 2022. This could provide the company with additional scale and enhance its profile.
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