| 12 Jul 2010 |
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UAE-Based Oman Insurance Co. (PSC) Ratings Affirmed At 'BBB+' And Removed From Watch Neg; Outlook Stable
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We have completed a satisfactory evaluation of the impact on Oman InsuranceOman Insurance
of the unexpected resignation of the company's entire board of directors. We are removing our long-term ratings on Oman InsuranceOman Insurance from CreditWatch negative and affirming them at 'BBB+'.
The outlook is stable.
Co. (PSC) at 'BBB+'. At the same time, we removed the ratings from CreditWatch with negative implications, where they had been placed on April 28, 2010. The outlook is stable.We have resolved the CreditWatch on Oman InsuranceOman Insurance
following our satisfactory evaluation of the impact of the unexpected resignation of the entire board of directors of the company."In our opinion, the resignation of the "old" board of directors and the appointment of a "new" board of directors has not been detrimental to the financial and business profile of Oman InsuranceOman Insurance and has not undermined its relationship with its parent, MashreqbankMashreqbank," said Standard & Poor's credit analyst Nigel Bond.
According to our investigations, a change in the audit firm of Oman InsuranceOman Insurance
may have been one of the reasons for the resignation of the old board. In our opinion, there appear to be sound reasons for changing the audit firm to the same firm used by MashreqbankMashreqbank. There does not appear to be any suggestion that the company's former audit firm was in any way deficient or inadequate, nor is there any suggestion that the old board of directors had something to hide.Mr. Bond noted: "It is too early for us to have assessed the efficacy of the new board of directors. Nevertheless, we believe that the old board's strongest impact was on investments. It had a limited impact on the strategy set by the management team, and we expect this to continue under the new board. Moreover, Oman InsuranceOman Insurance has claimed that its day-to-day operations have been unaffected by the hiatus in the boardroom."
Consequently, we will assess any strategic and operational developments arising from the introduction of the new board as part of the usual ongoing surveillance.
The stable outlook reflects our expectation that Oman InsuranceOman Insurance will improve its enterprise risk management, particularly its investment risk management, which should lower the company's risk profile. This should, in turn, benefit its capital adequacy and reduce both its capital and operating performance volatility. We also assume that the company's underwriting performance will, in the absence of exceptional circumstances, remain very strong in 2010 and 2011, with the net combined ratio continuing to be comfortably better than 90%. Meanwhile, we expect Oman InsuranceOman Insurance to maintain its strong competitive position as a leading insurer in the UAE.
RELATED CRITERIA AND RESEARCH
- Interactive Ratings Methodology, April 22, 2009
- Group Methodology, April 22, 2009
- Use Of CreditWatch And Outlooks, Sept. 14, 2009
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About Standard & Poor's in the GCC
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 late 1980's, Standard & Poor's currently has public ratings on more than 100 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 assigning 17 Fund Management Ratings. For further details on Standard & Poor's regional capabilities please visit www.gcc.standardandpoors.com
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