A.M. Best Affirms Credit Ratings of National Life and General Insurance Company SAOC
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A.M. Best has affirmed the Financial Strength Rating of B++ (Good) and the Long-Term Issuer Credit Rating of “bbb” of National Life and General Insurance Company SAOC (NLGIC) (Oman). The outlook of these Credit Ratings (ratings) remains stable.
The ratings reflect NLGIC’s strong risk-adjusted capitalisation, evolving business profile and track record of good operating performance. A partially offsetting rating factor remains the company’s concentrated underwriting portfolio, which is focused on the medical line of business.
In 2016, NLGIC successfully completed an OMR 16 million rights issue, fully subscribed by the company’s ultimate parent, Oman International Development and Investment Company SAOG (OMINVEST). This rights issue bolstered the company’s capital position, increasing shareholders capital to OMR 27 million (USD 69 million). A.M. Best expects the increased capital base to support prospective growth and increasing levels of underwriting activity and higher premium retention. Risk-adjusted capitalisation is further anticipated to be supported by strong earnings retention and an initial public offering during 2017 as mandated by Oman’s insurance regulation. Furthermore, NLGIC benefits from excellent liquidity and good financial support from its ultimate parent.
NLGIC has a leading market profile as a medical underwriter in Oman and a growing presence in the United Arab Emirates (UAE). This follows a period of concentrated growth in the company’s Oman and UAE medical operations, which currently account for more than 85% of gross written premiums. However, the company’s business profile is expected to become more diversified, with an increased focus on the motor line of business.
NLGIC has demonstrated a track record of good operating performance with a five-year average return on equity of 18%, primarily driven by strong technical results in the medical and motor line of business in Oman. The company experienced slight deterioration in technical performance in 2016, driven by an increase in claims costs relating to medical business in Dubai. However, management has taken corrective actions to improve pricing, the benefits of which are likely to be seen in 2017. NLGIC has improved the performance of its motor portfolio significantly, which contributed 31% of the company’s net technical result, with the combined ratio on this line of business improving to circa 61% from 82% in 2015. NLGIC has continued to generate stable investment income, with a five-year average investment return of 3%, reflective of the company’s conservative investment strategy.
This press release relates to Credit Ratings that have been published on A.M. Best’s website. For all rating information relating to the release and pertinent disclosures, including details of the office responsible for issuing each of the individual ratings referenced in this release, please see A.M. Best’s Recent Rating Activity web page. For additional information regarding the use and limitations of Credit Rating opinions, please view Understanding Best’s Credit Ratings.
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