AM Best Revises Outlooks to Stable for Suez Canal Insurance

LONDON--(BUSINESS WIRE)--AM Best has revised the outlooks to stable from negative and affirmed the Financial Strength Rating of B- (Fair) and the Long-Term Issuer Credit Rating of “bb-” (Fair) of Suez Canal Insurance (SCI) (Egypt). Concurrently, AM Best has upgraded SCI’s Egypt National Scale Rating (NSR) to aa+.EG (Superior) from aa.EG (Superior).

The Credit Ratings (ratings) reflect SCI’s balance sheet strength, which AM Best assesses as strong, as well as its adequate operating performance, limited business profile and marginal enterprise risk management (ERM).

The revised outlooks reflect improved operating performance, with the company significantly reducing its loss ratio, as well as reporting underwriting profits in each of the last two years.

SCI’s balance sheet strength is underpinned by its risk-adjusted capitalisation, which is expected to remain at least at the very strong level, as measured by Best’s Capital Adequacy Ratio (BCAR). Despite SCI’s relatively conservative investment allocation by asset class, AM Best considers the quality of its assets to be weak given the company's concentration in Egypt, which exposes SCI’s balance sheet to potential volatility. The company has a relatively high reliance on reinsurance, evident by a premium retention ratio of 46.7% in fiscal year-end 30 June 2024 (fiscal-year 2024). However, the associated counterparty credit risk is mitigated partially by the use of a financially strong reinsurance panel.

AM Best assesses SCI’s operating performance as adequate, with it having reported a five-year (2020-2024) weighted average return-on-equity ratio of 19.5%. The company’s underwriting results have been modest, with a five-year weighted average combined ratio of 102.4%, although recent underwriting performance in fiscal-years 2023 and 2024 has been positive. Nonetheless, underwriting results continue to be pressured by SCI's very high expense ratio, which has been above 55% in each of the last five years.

The business profile assessment reflects SCI’s position as a mid-tier insurer in Egypt, with a non-life market share of approximately 4% in fiscal-year 2024. The company’s profile is limited to operating solely within Egypt.

In recent years, SCI has undertaken positive steps to formalise its ERM function and promote a risk-aware culture across the organisation. AM Best expects that further improvements in SCI’s ERM framework and practices will support the company as it executes its strategic business plan.

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