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AM Best removes OIC from ‘under review’

AM Best has removed Oman Insurance Company’s credit rating from under review with negative implications.

The ratings agency has also affirmed the financial strength rating of A (excellent) and issuer credit rating of ‘a’.

AM Best said the ratings reflect OIC’s “excellent underwriting performance and leading business position in the UAE insurance market”.

A statement from the ratings agency said: “An offsetting factor is the exposure to variability of the company’s prospective risk-adjusted capitalisation, also in relation to the still high concentration of the financial assets portfolio.”

AM Best also said it’s rating comes after Mashreqbank – the major shareholder of OIC, with 63.65 per cent of shares – appointed members to OIC’s board. “Mashreqbank, until now, had no representation on the insurance subsidiary’s board. However, the new seven-person board includes two direct representatives plus one non-executive director of Mashreqbank, and one additional representative of Mashreqbank’s main shareholders. AM Best believes that this reduces the level of independence of OIC.

“Furthermore, future decisions involving the board, such as dividend distribution or investment strategy, could add downward pressure to OIC’s risk-adjusted capitalisation, which AM Best believes is adequate at the present time but exposed to a potential deterioration to a level not supportive of the company’s current ratings.”