AM Best revises Oman Insurance outlook on balance sheet strength
AM Best has revised the outlook to stable from negative and affirmed the financial strength rating of A (Excellent) of UAE-based Oman Insurance Company (OIC).
The ratings reflect OIC’s balance sheet strength, which AM Best categorises as very strong, as well as its "strong operating performance, neutral business profile, and appropriate enterprise risk management".
The move follows the strong corrective actions implemented by management on insurance and investment operations and AM Best’s expectation that these actions will lead to sustained strong performance.
These actions, which began in 2018, included the company’s increased focus on underwriting discipline, a strengthening of credit control procedures, and a de-risking of its invested asset portfolio.
"As a result of these actions, OIC delivered strong operating results in 2019, with the return on equity improving to 10.6%, from 0.5% in 2018," the agency said. "Furthermore, the company has implemented an expense savings initiative, which is expected to benefit the expense ratio over the next few years."
In 2019, the company strengthened its balance sheet through the full repayment of external borrowings and a material reduction in overdue debtor balances. The balance sheet strength assessment benefits from the company’s conservative investment strategy, which was de-risked further in 2019 following the sale of holdings in unlisted equities in 2019.
AM Best expects OIC to actively manage its capital position, ensuring its capital base supports its business plans.
