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30 January 2020
TAKAFUL

A2 IFS ratings affirmed for Oman Insurance Company

The insurance company is the leading insurer in the UAE, the MENA region’s largest insurance market, with a market share of about 18 per cent and top three positions in life, medical and consumer lines insurance

Oman Insurance Company is majority-owned by Mashreq Bank (Baa1/stable), the fifth-largest bank in the UAE/Bloomberg

by Kudakwashe Muzoriwa

Moody’s affirmed its A2 insurance financial strength rating (IFSR) of Oman Insurance Company (OIC) with a stable outlook.

The UAE-based insurance firm’s A2 rating reflects its strong market position and franchise in the Middle East and North Africa (MENA) region, well-diversified business profile across product and distribution and solid financial profile including moderate asset risk and good capital adequacy.

According to Moody’s, “The progress OIC has made in enhancing profitability, along with moderate reserve risk and its good technical expertise and risk management capabilities further support its credit profile.”

Furthermore, OIC’s market position is supported by its well-diversified portfolio of business lines and distribution channels, which reduces its susceptibility to disruption of product lines or distribution.

Moody’s noted that OIC’s operating profit has strengthened over the past four years due to actions the company has taken to improve underwriting quality, lower expenses and improve recurring investment income.

OIC has one of the largest commercial insurance businesses in the region, with a good reputation of technical underwriting expertise, and strong partnerships with large international commercial insurers, said Moody’s.

However, medical insurance, which accounts for almost half of OIC’s premiums, exposes the company to social risks such as rising medical costs inflation, which the company manages through annual repricing and exposure adjustment.

Moody’s noted that through its exposure to economies of the UAE and the broader MENA region, the insurance is exposed to environmental risks related to carbon transition, that could place pressure on the regions’ economies over the longer-term.

OIC is majority-owned by Mashreq Bank (Baa1/stable)—the fifth-largest bank in the UAE—and publicly listed on the UAE stock exchange.


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