AM Best has affirmed the Financial Strength Rating of B++ (Good) and the Long-Term Issuer credit rating of "bbb" of Egypt's Misr Life Insurance Company. The outlook of these Credit Ratings is stable. MLIC and Misr Insurance Co. are directly owned by Misr Insurance Holding Co. and form part of the consolidated Misr Group. The ratings reflect MLIC's balance sheet strength, which AM Best categorises as very strong, and its adequate operating performance, neutral business profile, and appropriate enterprise risk management. The ratings also factor in the financial strength of the Misr Group, due to MLIC's strategic importance to the group. The firm's risk-adjusted capitalisation, as measured by Best's Capital Adequacy Ratio (BCAR), is assessed at the strongest level. The company's risk-adjusted capitalisation benefits from unrealised gains on its real estate portfolio, for which market values are significantly higher than its book values. AM Best believes interest rate risk on the company's savings products is mitigated as a result of the modest level of guarantees and Egypt's historically high interest rate environment. Regulatory restrictions limit the company's investment options and whilst the company maintains a conservative investment portfolio, assets are subject to the high financial system risk in Egypt. MLIC's earnings have improved consistently over recent years, driven by strong investment income and healthy technical margins on new business, reflecting the high interest rate environment and the company's dominant market position. The company reported pre-tax earnings worth 1.3 billion Egyptian pounds ($78.7 million) for the year-ended 30 June 2019, equivalent to a return-on-equity of 14.2 percent. The company's earnings can be attributed to investment income, indicative of the company's large asset base and Egypt's relatively high interest rate. There is pressure on the company's expense base as a result of high commission rates on its direct sales force, although management has proactively taken measures to manage this. MLIC has an excellent business profile in its domestic market. The company's gross written premiums increased by 11.0 percent to 4.5 billion pounds during the 2018/2019 financial year, reinforcing its market-leading position in Egypt's life insurance sector with a market share of approximately 34 percent. Whilst the company is concentrated in Egypt and focused on individual and group savings products, management is proactively navigating the changing market dynamics and, in turn, pursuing a number of strategic initiatives, including the inception of new bancassurance deals.
