Fitch Affirms Oman Re’s Monetary Power Ranking

Fitch Rankings has affirmed Oman Re’s (SAOG) Insurer Monetary Power (IFS) score at ‘BBB-‘. The score company mentioned the outlook stays secure.

positive This displays Oman Re’s funding threat linked to the credit score high quality of Omani authorities bonds, in addition to the corporate’s strong company profile, capitalisation and monetary efficiency.

Fitch considers Oman Re’s funding and asset threat to be carefully linked to the creditworthiness of the Sultanate of Oman. As of end-2023, 60% of Oman Re’s complete invested belongings are mounted time period deposits with Omani banks or US dollar-denominated authorities bonds issued by Oman, down from 68% in 2022.

Fitch famous that Oman Re maintains a prudent funding technique with a well-diversified portfolio. The corporate’s conservative asset allocation is demonstrated by its threat belongings/capital ratio (RAR) of 66% in 2023, an enchancment from 87% in 2022. The development is because of the improve of Oman’s sovereign debt score in September 2023 and efforts to diversify the funding portfolio.

Oman Re has expanded its operations by means of its Qatar Monetary Centre department, primarily investing new capital in prime quality overseas foreign money denominated belongings.

Oman Re has considerably strengthened its footprint over the previous 5 years, primarily within the Center East and North Africa area. Turkey is the biggest marketplace for reinsurance contracts in 2023, accounting for 14%, adopted by the UAE, Pakistan and Oman.

Nevertheless, in contrast with its international friends, Oman Re’s enterprise is small, with complete reinsurance earnings of OMR 42 million (US$111 million) in 2023.

Fitch considers Oman Re’s capital construction to be supportive of the scores. Primarily based on end-2023 knowledge, the reinsurer’s Prism World Mannequin Rating stays on the decrease finish of ‘Robust’, as in 2022. Stress on the goal capital stems from robust double-digit progress in reinsurance earnings, whereas capital adequacy elevated by 8.4%. Oman Re’s accessible capital is of top of the range and consists primarily of paid-in capital, with a regulatory solvency margin of 214% at end-2023.

Fitch sees Oman Re’s monetary efficiency as robust, mirrored in a web revenue ROE of 8.4% in 2023, up from 7.5% in 2022. The corporate is on monitor to attain web revenue after tax of Omani riyals 2.5 million in 2023, up from Omani riyals 2.1 million in 2022, supported by robust underwriting and funding efficiency. The headline ratio improved to 88.6% in 2023, from 97.5% in 2022, pushed by an improved loss ratio.

Fitch assesses Oman Re’s reserving practices to be prudent and reserve adequacy to be excessive, supported by robust actuarial experience and conservative underwriting insurance policies. Most of Oman Re’s enterprise is short-term.

Components that might result in a constructive score motion or improve embody an improve of the scores of the State of Oman or the financial institution, a big realignment of the funding portfolio away from time period deposits and different investments by means of Oman banks to cut back publicity to the Oman banking system, and a strengthened company profile evaluation.

Components that might result in destructive score motion or downgrade embody a downgrade of Oman’s sovereign score and/or Oman’s financial institution scores, in addition to a discount in capital, measured on the decrease finish of the ‘ample’ Prism FBM rating.

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