A.M. Best Europe – Rating Services Limited has affirmed the financial strength rating of ‘B++’ (Good) and the issuer credit rating of “bbb” of Oman’s National Life & General Insurance Company SAOC (NLGIC); however, best’s outlook on both ratings remains negative.
The ratings of NLGIC “continue to reflect its strong risk-adjusted capitalization, good track record of profit generation in its core life operation and leading position in the Omani life insurance market,” Best explained. “However, the ratings and outlook also take into account the company’s expansion into non-life insurance, which continues to strain profitability, as well as NLGIC’s weak enterprise risk management (ERM).”
Best said that in its opinion, “NLGIC’s prospective risk-adjusted capitalization remains strong, benefitting from its relatively large capital base, fairly conservative investment strategy and low credit risk given the company’s sound panel of reinsurers.” Best also noted that it “considers NLGIC to have sufficient capital to support any foreseen growth over the next two years.
“NLGIC has a good track record of profit generation in its core life operation, benefitting from its leading position in the Omani life insurance market. However, profitability has been deteriorating in recent years following NLGIC’s expansion into non-life markets.”
As a result, Best said it remains “concerned about the performance of the company’s motor business, which is likely to continue generating technical losses in the coming years. Furthermore, whilst the company’s medical business is currently profitable, management will be required to supervise this portfolio closely to ensue performance is maintained.”
In addition Best pointed out that in its opinion “NLGIC’s ERM is weak in comparison to local peers. NLGIC lacks internal controls over key functions, in particular investment risk management, and is unable to demonstrate that risks are being identified and mitigated effectively.”
Source: A.M. Best
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