Standard & Poor's Ratings Services last week revised its outlook on Oman-based insurer Oman United Insurance Co (OUIC) to positive from stable. At the same time, it affirmed the BBB- long-term counterparty credit and insurer financial strength ratings on OUIC. “The outlook revision reflects our view of OUIC's profitable market share gains over the past 18 months, which, if sustained, could improve our assessment of its competitive position. Evidence that premium growth is both sustainable and profitable, with net combined ratios between 95 per cent and 100 per cent, would partly mitigate our views of moderately high industry and economic risks in the Omani insurance sector." The BBB- ratings reflect our view of OUIC's good capitalisation and good operating performance. These strengths are partially offset by risks within its investment portfolio and the limited scale and diversity of its competitive position," S&P added. OUIC is building a track record of successfully targeting and attracting clients in profitable segments. This is reflected in gross written premium (GWP) growth of 44 per cent in 2011 and 25 per cent year-on-year to June 2012. “We expect OUIC to continue to develop its selective underwriting approach and growth strategy for non-life and life/medical business. Under our base-case scenario we expect GWP of around RO35mn by year-end 2012 and at least ten per cent growth in 2013 to build greater scale and diversify its risk exposures." Our view of competitive position also incorporates our assessment of moderately high economic and industry risks in Oman. This reflects the exposure of the country to natural catastrophes, the entry and effect of foreign players in the local market, and the relatively slow pace of economic development when compared to its GCC peers. These risk factors could limit OUIC's ability to meet our expectations of profitable growth, according to the ratings agency. “We view capital adequacy as good. We expect retained earnings to be sufficient to support growth and gradually strengthen capital adequacy. Our capital assessment continues to be constrained by the high market and counterparty risks within its investment portfolio and the small size of the capital base." Muscatdaily
