The rating agency said that the insurance company’s profitability has been consistently below the company’s historical average and regional peers.
AM Best has affirmed its A financial strength and long-term issuer credit rating of UAE-based Oman Insurance Company (OIC), revising the outlook to negative from stable.
In a statement, AM Best sated that the ratings reflect OIC’s balance sheet strength, which is categorised as very strong, strong operating performance as well as neutral business profile and appropriate enterprise risk management.
The revised outlooks to negative is said to be a reflection of the decline in OIC’s operating performance.
The insurance company has implemented initiatives to improve its operating performance, however a level of execution risk still exists and OIC is burdened further by the challenging market conditions and significant pressure on rates.
The deterioration in OIC’s operating performance was driven primarily by a number of one-off management actions including the impact of the early adoption of IFRS 9 and the strengthening of cautious provisions in relation to legacy claims, added AM Best.
OIC has a leading market position in the UAE, where it stands as the largest listed insurance company by gross written premium and it is majority owned by Mashreq Bank.