The ratings reflect NLGIC’s balance sheet strength, which AM Best categorises as very strong, as well as its strong operating performance, limited business profile and appropriate enterprise risk management.
‘NLGIC’s balance sheet strength is underpinned by risk-adjusted capitalisation at the strongest level, as measured by AM Best’s capital adequacy ratio, which benefits from a conservative investment strategy and a reinsurance panel of good credit quality’, AM Best said.
It said the balance sheet assessment also factors in the company’s good level of liquidity and the absence of financial leverage. ‘Offsetting factors include the concentration of the company’s assets in GCC markets and its relatively high reinsurance dependence. The balance sheet strength assessment incorporates the AM Best’s assessment of economic, political and financial system risk in Oman and the UAE’, the ratings agency said.
AM Best said that NLGIC’s strong operating performance, evidenced by a five-year (2014-2018) weighted average return on equity of 16 per cent, has been driven by good underwriting results from its non-life portfolio.
‘Medical and motor business are the principal contributor to earnings, with performance supported by profits from the company’s group credit life business and stable albeit relatively modest investment income’, AM Best added.
NLGIC has a concentrated underwriting portfolio, with medical business accounting for 80 per cent of gross written premiums. The company is the leading medical underwriter in Oman and has a growing presence in the UAE. ‘NLGIC is well-positioned to benefit from the expected introduction of mandatory health insurance scheme in Oman, with the anticipated increase in business likely to provide the company with additional scale’, the ratings agency added.