News Column

A.M. Best Assigns Ratings to Muscat Insurance Company SOAC

February 17, 2014

A.M. Best has assigned a financial strength rating of B+ (Good) and issuer credit rating of "bbb-" to Muscat Insurance Company SAOC (MIC) (Oman).

The outlook assigned to both ratings is stable.

The ratings reflect MIC's strong risk-adjusted capitalisation and sound record of operating performance. An offsetting rating factor is the company's limited business profile in a highly competitive domestic market.

MIC's risk-adjusted capitalisation is expected to remain strong and supportive of the company's projected growth over the medium term. MIC's capital position benefits from low underwriting leverage and a conservative investment portfolio weighted towards cash and investment grade bonds. The company's low level of retained premium is supported by a reinsurance panel of sound financial strength.

MIC has demonstrated a consistent track record of technical performance with a five-year average combined ratio of 78 percent, producing profit on all business segments. The company adopts prudent underwriting practices and tight control over expenses, particularly for motor claims. The performance of commercial lines is driven by high levels of inward commission income.

MIC is a small player in the Omani insurance market with its 2013 gross written premium (GWP) expected to reach approximately OMR 10 million (USD 25 million), representing 4 percent of the market. While GWP is diversified across a number of business lines, motor represents approximately 90 percent of the company's net written premium.

Upward rating movement could arise if MIC can grow its business profile while maintaining sound operating performance. Downward rating movement could arise if MIC's risk-adjusted capitalisation were to deteriorate to a level not supportive of the rating.

The methodology used in determining these ratings is Best's Credit Rating Methodology, which provides an explanation of A.M. Best's rating process and contains the different rating criteria employed in the rating process.

A.M. Best Company is an insurance rating and information source.

More Information:

http://www.ambest.com

Best's Credit Rating Methodology:

http://www.ambest.com/ratings/methodology

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