A.M. Best has upgraded the Long-Term Issuer Credit Rating to “bbb+” from “bbb” and affirmed the Financial Strength Rating to B++ (Good) of Oman’s National Life and General Insurance Company (NLGIC). The outlook of these Credit Ratings remains stable.
The ratings reflect National Life and General Insurance Company (NLGIC)’s balance sheet strength, which A.M. Best categorizes as very strong, as well as its strong operating performance, limited business profile and appropriate enterprise risk management. The rating action reflects NLGIC’s ability to strengthen its risk-adjusted capitalization through strong and consistent operating performance.
NLGIC’s balance sheet strength is supported by its risk-adjusted capitalization being at the strongest level, as measured by Best’s Capital Adequacy Ratio (BCAR).
The company’s risk-adjusted capitalization benefits from a conservative investment profile and a reinsurance panel of good credit quality. A.M. Best expects prospective capitalization to remain strong, driven by robust internal capital generation.
The company’s balance sheet strength also benefits from a good level of liquidity and no financial leverage.
Offsetting rating factors include the moderate reinsurance dependence and concentration of assets in Gulf Cooperation Council markets.
In response to changing regulations in Oman, NLGIC underwent an initial public offering in 2017 for 25% of its share capital on the Muscat Securities Market. The IPO has enhanced the company’s financial flexibility, with proven shareholder support.
The company has achieved a five-year (2013-2017) adjusted average return on equity of 17%, driven by strong underwriting results and a five-year average (2013-2017) combined ratio of 90% for its medical and motor business.
In 2017, the company’s underwriting results improved to OMR 7.2 million (USD 18.9 million) from OMR 3.1 million (USD 8 million) in 2016 due to management actions taken to improve the performance of its motor and medical portfolio. This included the shedding of loss making accounts, management of claims costs and repositioning of medical products in Dubai. NLGIC’s operating performance is further supported by stable investment income, reflective of the company’s conservative investment portfolio.
NLGIC’s insurance operations, whilst benefiting from a marginal level of geographic diversification, are heavily concentrated to the medical line of business, which currently accounts for 80% of gross written premiums.
NLGIC has a leading market profile as a medical underwriter in Oman and a growing presence in the United Arab Emirates. Over the last five years, the company has achieved significant growth in its medical portfolio, primarily stemming from its branch operations in Dubai. During 2017, the company acquired Inayah TPA in Dubai, which is expected to give the company a competitive advantage in terms of pricing and claims management over the medium term. The company is well positioned to benefit from the expected introduction of mandatory medical programs in Oman, which will provide the company with additional scale.
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