-- Oman United Insurance CoOman United Insurance Co. S.A.O.G.'s competitive position has been negatively affected by regulatory changes to motor insurance and more constrained product distribution in certain lines.

-- We have lowered our long-term counterparty credit and insurer financial strength ratings on Muscat-based insurer Oman United Insurance to 'BBB-' from 'BBB'.

-- The stable outlook reflects our view that capital adequacy and operating performance will gradually improve.

LONDON (Standard & Poor's) July 1, 2009--Standard & Poor's Ratings Services said today that it lowered its long-term counterparty credit and insurer financial strength ratings on Oman United Insurance CoOman United Insurance Co. S.A.O.G. (OUICOUIC) to 'BBB-' from 'BBB'. The outlook is stable.

"The downgrade reflects our view that despite remaining Oman's second-largest insurer, OUICOUIC's business profile has weakened as a result of a decline in its competitive position," said Standard & Poor's credit analyst Neil Gosrani.

This is due to attempts to substantially increase motor rates following the authorities' introduction of a unified motor policy in July 2008, and from more constrained distribution given the withdrawal from an existing agreement. In addition, the company has suffered some management instability in 2008 and new strategies need to be implemented. Weak operating performance, particularly from the motor book of business, has placed pressure on the company's current earnings and combined with weakness in the local equity market has put downward pressure on OUICOUIC's risk-adjusted capital adequacy. In 2008, OUICOUIC recorded about Omani rial (OMR)6 million of fair-value asset losses and impairments on investments, although shareholders' capital remains satisfactory at OMR15.5 million at March 31, 2009

"The stable outlook on OUICOUIC reflects our view that capital adequacy and operating performance will gradually improve as the company brings greater selectivity and therefore greater stability to its underwriting performance," added Mr. Gosrani.

Although unlikely, an outlook revision to negative may result from a decline in capital adequacy, which may be due to continued underwriting underperformance or depressed equity markets. A positive ratings movement is unlikely during the outlook period and would require the rebuilding of a stable track record both in technical performance and in management and business strategies.

-Ends-

About Standard & Poor's in the Gulf Cooperation Council
Standard & Poor's is the leading provider of financial market intelligence to customers in the Gulf's credit risk management, wealth management, and data and information markets. Since entering the region in the early 1990's, Standard & Poor's has become the largest provider of credit ratings in the G.C.C, rating 114 issuers. In equity markets, Shariah-compliant versions of Standard & Poor's global and regional equity market indices - S&P 500, S&P Europe 350, S&P Japan 500 and S&P/IFCI GCC - have created new opportunities for Islamic investors to benchmark their international investments and for asset managers to create new investment products serving the Islamic community. Standard & Poor's Fund Services launched a qualitative fund management rating service for regional asset managers in 2007. For further details on Standard & Poor's regional capabilities please visit www.gcc.standardandpoors.com

Press Office Contacts:
London: +44 20 7176 3605
Dubai: +971 4709 6830
Paris: +33 1 44 20 6740
Frankfurt: +49 69 33999 225
Milan: +39 02 72 111 245
Madrid: +34 91 389 6944
Moscow: +7 495 783 4011
Stockholm: +46 8 440 5914

© Press Release 2009

 

Community Comments (0) - Comment on this article

The opinions of the authors expressed herein do not necessarily state or reflect Zawya. Read our Comment Policy.

 

 

 

close x

Loading ...

 

close x

Report Abuse

Loading ...

 

 

close x

Loading ...