AM Best Affirms Credit Ratings of Misr Life Insurance Company

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” (Good) 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 assesses as very strong, as well as its strong operating performance, neutral business profile and appropriate enterprise risk management.

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 level required for the strongest BCAR assessment, supported by its good internal capital generation. Despite the company’s relatively conservative investment allocation by asset class, AM Best considers the quality of MLIC’s assets to be weak given the concentration in Egypt. The balance sheet strength assessment also factors in Egypt’s high economic risk and political risks, and very high financial system risk.

MLIC has a track record of strong operating performance, as evidenced by a five-year (2017-2021) weighted average return-on-equity (ROE) of 16.2%. Overall performance has been consistently strong in recent years, with MLIC reporting an ROE of 18.4% for the year-ended 30 June 2021 (fiscal-year 2021). 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 position in its domestic market. The company’s gross written premium increased by 53.8% during fiscal-year 2021 to EGP 7.8 billion (USD 496.4 million), driven by the inception of the bancassurance agreement with National Bank of Egypt in 2020. This further supported its market-leading position in Egypt’s life insurance sector with a market share of approximately 33%. Management continues to pursue a number of strategic initiatives proactively to enhance its business profile, including expanding its base of bancassurance agreements with other banks in Egypt and further developing its direct sales force to improve its distribution capabilities across the country.

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