A.M. Best Europe – Rating Services Limited has revised the outlook to stable from negative and affirmed the financial strength rating of B++ (Good) and the issuer credit rating of “bbb” of National Life and General Insurance Company SAOC (NLGIC) (Oman).
The rating actions reflect NLGIC’s supportive risk-adjusted capitalisation, the improved technical performance on its non-life business and its positive track record of operating performance.
NLGIC’s risk-adjusted capitalisation has improved in 2012 and remains supportive of the company’s current ratings. In 2012, NLGIC's capital and surplus increased to OMR 16 million (USD 41 million) from prior year’s OMR 13 million (USD 33 million) as a result of NLGIC's improved profitability and full profit retention. NLGIC’s risk-adjusted capitalisation is supported by a sound panel of reinsurers with good credit quality and a moderate level of investment risk. Offsetting factors include NLGIC’s increasing business leverage, resulting from a fast growing medical portfolio in Dubai and a higher retention ratio in the motor business.
The performance of NLGIC’s non-life business has been improving since 2010 when the company decided to remove from its portfolio underperforming policies and improve its claims management process. Overall non-life technical losses declined to OMR 210,000 (USD 546,000) in 2012 from an average loss of OMR 2 million (USD 3.3 million) in the last three years.
NLGIC has a good track record of generating profits. Over two thirds of NLGIC’s overall profitability is generated through the technical account, owing to its solid domestic franchise in the medical and life business. Additionally, NLGIC’s investment performance is stable and has been generating good yield levels. At year-end 2012, profit-after-tax totaled OMR 3.2 million (USD 8.3 million), up from OMR 1.2 million (USD 3.2 million) in 2011 and 130% higher than the previous three years average of OMR 1.4 million (USD 3.6 million). Return on adjusted capital and surplus was 22.4%.
Going forward, a deterioration in NLGIC’s operating performance or a materially weaken risk-adjusted capitalisation level could negatively impact the company’s ratings. Upward rating movements are unlikely over the medium term.
The methodology used in determining these ratings is Best’s Credit Rating Methodology, which provides a comprehensive explanation of A.M. Best’s rating process and contains the different rating criteria employed in the rating process. Key criteria utilised include: “Risk Management and the Rating Process for Insurance Companies”; “Evaluating Country Risk”; and “Understanding Universal BCAR”. Best’s Credit Rating Methodology can be found at www.ambest.com/ratings/methodology.
In accordance with Regulation (EC) No. 1060/2009, the following is a link to required disclosures: A.M. Best Europe - Rating Services Limited Supplementary Disclosure.
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