A.M. Best Revises Outlook to Stable and Affirms Ratings for Arab Misr Insurance Group S.A.E

LONDON, 3 June 2015

A.M. Best has revised the outlook to stable from negative and affirmed the financial strength rating of B++ (Good) and the issuer credit rating of "bbb" of Arab Misr Insurance Group S.A.E (GIG-Egypt) (Egypt).

The revised outlook reflects the strengthened risk-adjusted capitalisation and the improved level of economic, political and financial system risk associated with Egypt. The ratings reflect GIG-Egypt's strong risk-adjusted capitalisation, good track record of profitability and its sound domestic franchise. GIG-Egypt's rating benefits from the financial strength of its parent company, Gulf Insurance Group K.S.C.P., and its strategic importance to the group.

GIG-Egypt's risk-adjusted capitalisation continues to strengthen as profit retention outpaces growth in capital requirements. Despite GIG-Egypt's material exposure to Egyptian assets, particularly government treasury bills, the company's risk-adjusted capitalisation is sufficiently strong to absorb the higher risk charges for these concentrated assets.

GIG-Egypt continues to produce robust technical performance despite the challenging economic backdrop and intense competition from domestic market participants. The company has generated strong combined ratios below 90% in each of the past five years. During the year ending July 2014, the combined ratio improved to 76%, driven by strong performance in all major lines of business. Underwriting performance has been supported by stable returns on investments, yielding approximately 8% in 2014. GIG-Egypt remains a leading non-life company among the private insurers in Egypt, producing gross revenues of EGP 369 million (USD 52 million) in 2014.

GIG-Egypt's business is generated locally, and its investment portfolio is highly concentrated in Egyptian government debt. Whilst the latter is of particular concern, A.M. Best notes that the maturity of the fixed income investments is less than 12 months for the vast majority of the portfolio.

Developments in Egypt's economic and political environments are likely to be the main drivers of any future rating movements, either negative or positive.

The methodology used in determining these ratings is Best's Credit Rating Methodology, which provides a comprehensive explanation of A.M. Best's rating process and contains the different rating criteria employed in the rating process. Best's Credit Rating Methodology can be found at www.ambest.com/ratings/methodology.

Key insurance criteria reports utilised:

· Understanding Universal BCAR

· Evaluating Country Risk

· Risk Management and the Rating Process for Insurance Companies

· Catastrophe Analysis in A.M. Best Ratings

· Rating Members of Insurance Groups

In accordance with Regulation (EC) No. 1060/2009, the following is a link to required disclosures: A.M. Best Europe - Rating Services Limited Supplementary Disclosure.

This press release relates to rating(s) that have been published on A.M. Best's website. For all rating information relating to the release and pertinent disclosures, including details of the office responsible for issuing each of the individual ratings referenced in this release, please visit A.M. Best's Ratings & Criteria Center.

A.M. Best Company is the world's oldest and most authoritative insurance rating and information source. For more information, visit www.ambest.com.

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