Best Affirms Misr ‘A- Ratings

October 17, 2005

A.M. Best Co. announced that it has affirmed the financial strength rating of “A-” (Excellent) and the issuer credit rating of “a-” of Egyptian insurer Misr Insurance with a stable out look.

“The ratings reflect Misr’s good overall risk-adjusted capitalisation, solid operating performance and leading business profile in the Egyptian market,” said Best. “On a risk-adjusted basis, A.M. Best believes Misr’s capital position will remain supportive of the current rating although its exposure to unlisted equities and the concentration of its investments in Egypt impairs the quality of capitalisation.”

Best noted that it expects Misr’s combined ratio to improve by June 2006 to approximately 85 percent, following the increase to 110 percent forecast for 2005, “which is mainly driven,” Best noted,” by the incurred losses from the Temsah natural gas platform fire in Egypt in August 2004.”

Best also said it “expects the life technical results to increase from the anticipated EGP 50 million (USD 8.7 million) in 2005 to approximately EGP 60 million (USD 10.4 million) at year-end June 2006, mainly driven by the surge in demand for life products in the Egyptian market. In A.M. Best’s opinion, Misr’s investment return at year-end June 2006 is likely to be the main contributor of the profit and expects it to be in line with the anticipated 13 percent in 2005 due to the high interest rate environment in Egypt.”

Best also indicated that it “believes that Misr will maintain its position as a prominent non-life and life insurer since the company is the leading insurer for many public sector companies.” The rating agency “forecasts the company’s gross written premiums to continue increasing to approximately EGP 2.18 billion (USD 380 million) at year-end June 2006 from anticipated EGP 1.95 billion (USD 337 million) in 2005. A.M. Best believes that this growth is likely to be driven by aviation, energy, and life business.”

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