AM Best Affirms Credit Ratings of Oman Insurance Company P.S.C.
AM Best has affirmed the Financial Strength Rating of A (Excellent) and the Long-Term Issuer Credit Rating of "a" (Excellent) of Oman Insurance Company P.S.C. (Sukoon) (United Arab Emirates). The outlook of these Credit Ratings (ratings) is stable.
The ratings reflect Sukoon's balance sheet strength, which AM Best assesses as very strong, as well as its strong operating performance, neutral business profile and appropriate enterprise risk management.
Sukoon's balance sheet strength is underpinned by its risk-adjusted capitalisation at the strongest level, as measured by Best's Capital Adequacy Ratio (BCAR). AM Best expects Sukoon's risk-adjusted capitalisation to remain comfortably in excess of the strongest threshold prospectively as the company executes its strategic plan, supported by continued internal capital generation. The company's balance sheet strength is supported further by its relatively conservative investment portfolio, excellent liquidity profile and prudent reserving practices. Offsetting factors include the company's high dependance on reinsurance, although the associated counterparty credit risk is mitigated partially by the use of a panel of financially sound reinsurers.
Sukoon has a track record of strong operating performance, illustrated by a weighted average return-on-equity ratio of 9.9% over the past four years (2019-2022) (2022: 9.5%), following corrective actions implemented in 2018. Despite highly competitive conditions in the UAE insurance market, the company reported an improved profit after tax of AED 223.6 million (USD 60.9 million) in 2022, an increase of 8.5% over 2021. Sukoon's operating performance continues to be supported by robust non-life underwriting results, with the company achieving a four-year (2019-2022) weighted average combined ratio of 92.5% (2022: 92.1%), as calculated by AM Best, as well as healthy investment returns, with a weighted averae net investment yield (including gains) of 3.0% over the same period.
Sukoon has a market-leading position in the UAE, where it ranks as the third-largest insurance company by gross written premium (GWP). In 2022, Sukoon underwrote AED 4.4 billion (USD 1.2 billion) in GWP, growth of 24.0% over 2021. In recent periods, the company has executed several strategic initiatives to enhance its geographical and product diversification, notably through the launch of its Lloyd's syndicate-in-a-box and the acquisition of Assicurazioni Generali S.p.A.'s UAE life insurance portfolio. In May 2023, Sukoon announced the completion of its entry in the UAE takaful insurance market through the acquisition of Arabian Scandinavian Insurance Company P.L.C. - Takaful ASCANA Insurance. Nonetheless, Sukoon's underwriting portfolio remains concentrated in its domestic market where approximately 70.0% of GWP is sourced.
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