Standard & Poor’s Ratings Services announced that it has assigned its ‘BBB’ long-term counterparty credit and insurer financial strength ratings to Oman-based insurer Oman United Insurance Co. SAOG (OUIC) with a stable outlook.
“The ratings on OUIC reflect the company’s strong and stable earnings and extremely strong capital adequacy,” stated S&P credit analyst Jelena Bjelanovic. “These factors are partially offset by the high level of concentration risk residing in OUIC’s investment portfolio, as well as the moderately high industry risk in the small and concentrated Omani economy, which affects our view of competitive position,” she added.
S&P said the “stable outlook on OUIC reflects our expectation that the company will retain its competitive standing in the Omani market in 2006. Personal lines (in particular, motor and individual life cover) and small commercial business (loan protection) will benefit from OUIC’s cooperation agreement with local finance companies, but premium income growth is unlikely to exceed GDP growth projections of 4 percent-6 percent. Capital adequacy is expected to remain extremely strong.”
S&P also indicated that it “expects OUIC to continue to generate attractive earnings, broadly in line with the levels achieved previously. Operating performance will remain strong, although it will be subject to competitive pressures in the marketplace. Nevertheless, the combined ratio will remain well below 100 percent. We consider the current rating level to be the long-term position for OUIC. However, if prolonged competition leads to a substantial deterioration in OUIC’s competitive position and in its underwriting performance, this would put downward pressure on the ratings.”
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