A.M. Best Assigns Ratings to Misr Insurance Company

LONDON--(BUSINESS WIRE)-- A.M. Best has assigned a financial strength rating of B++ (Good) and an issuer credit rating of “bbb” to Misr Insurance Company (Misr Insurance) (Egypt), a wholly owned subsidiary of Misr Insurance Holding Company (Misr Holding). The outlook assigned to both ratings is stable.

The ratings reflect Misr Insurance’s excellent business profile in Egypt, strong risk-adjusted capitalisation and track record of good operating performance. An offsetting rating factor is the company’s exposure to the very high level of political risk and high levels of economic and financial system risks associated with operating in Egypt. The ratings also factor in the financial strength and flexibility of the parent company, as well as Misr Insurance’s strategic importance as the non-life and reinsurance operations of the group.

Misr Insurance has an excellent business profile as a leading non-life insurer in Egypt. The company’s premium base surpassed EGP 4.8 billion (USD 0.6 billion) in 2015, equating to a domestic non-life market share of approximately 55%. Despite more than 90% of the company’s premiums originating from Egypt, its underwriting portfolio is well balanced by class of business. The company holds a market leading position in fire, motor, marine, engineering, oil and aviation lines of business.

The company’s risk-adjusted capitalisation remained at a strong level during 2015. Misr Insurance’s capital consumption is driven by underwriting and investment operations, with the company’s investment portfolio, in particular, attracting higher capital charges given its focus toward Egyptian denoted assets. The company’s capital and surplus is supported by significant retrograded fluctuation (equalisation) reserves of which full capital credit has been given in Best’s Capital Adequacy Ratio (BCAR) model. Prospective capital adequacy is expected to remain supportive of the company’s business strategy over the medium term, supported by a prudent dividend policy and strong retained earnings.

The company has demonstrated a track record of good pre-tax operating results, evidenced by profits in each of the last five reported years (2011-2015). An improved pre-tax profit of EGP 1.1 billion (USD 144.1 million) was reported for the financial year to June 2015, compared with EGP 0.9 billion (USD 128.6 million) in 2014. Prior to 2013, technical operations had generated losses, mainly due to weak performance from the company’s mandatory motor third-party liability portfolio. However, changes in the limit of liability attached to this line of business, combined with increased tariffs, has enabled improved performance. In addition, the company has strengthened its risk selection and underwriting discipline on other lines of business. As a consequence of these changes, the company has reported technical profits in each of the last two years. However, technical earnings remain marginal and profitability continues to be driven by non-technical income from the company’s large invested asset base.

Political and financial instability, as well as social unrest in Egypt, has the potential to disrupt the economic conditions in Egypt. Despite Misr Insurance’s track record of successfully navigating these challenging market conditions, A.M. Best continues to monitor the impact these external factors may have on the company’s operations.

In accordance with Regulation (EC) No. 1060/2009, the following is a link to required disclosures: A.M. Best Europe - Rating Services Limited Supplementary Disclosure.

This press release relates to rating(s) that have been published on A.M. Best's website. For all rating information relating to the release and pertinent disclosures, including details of the office responsible for issuing each of the individual ratings referenced in this release, please visit A.M. Best’s Ratings & Criteria Center.

A.M. Best Company is the world's oldest and most authoritative insurance rating and information source. For more information, visit www.ambest.com.

Copyright © 2015 by A.M. Best Company, Inc. ALL RIGHTS RESERVED.

View source version on businesswire.com: http://www.businesswire.com/news/home/20151221005777/en/

A.M. Best Company
Myles Gould, +(44) 20 7397 0267
Senior Financial Analyst
[email protected]
or
Mahesh Mistry, +(44) 20 7397 0325
Director, Analytics
[email protected]
or
Christopher Sharkey, +(1) 908 439 2200, ext. 5159
Manager, Public Relations
[email protected]
or
Jim Peavy, +(1) 908 439 2200, ext. 5644
Assistant Vice President, Public Relations
[email protected]

Source: A.M. Best Company

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