International rating agency Fitch Ratings has affirmed the National Insurer Financial Strength rating (NIFS) of National Life Insurance Company SAOC, Oman (NLIC) at 'AA-(oma)' ('AA minus (oma)'). The rating Outlook is Stable.
The rating reflects NLIC's leading position in the Oman life insurance market, the company's very strong capitalization, conservative investment allocation and liquid balance sheet. NLIC is the leading life insurance company in Oman with an overall market share of approximately 38 percent.
The company has dominant and defendable positions in the Omani life insurance market for group credit life and group life insurance where it benefits from economies of scale relative to smaller local life insurers.
Although capital levels maintained by NLIC are relatively small by international standards, the company is the largest dedicated life insurer operating in Oman. Capital adequacy remains extremely strong and is supportive of the company's current rating level.
This view is substantiated by NLIC's free asset ratio which on an unadjusted basis stood at 48 percent at year-end 2002, based on unaudited data. Even after the deduction of goodwill, the free asset ratio equates to 36.2 percent, which by international standards is very robust.
NLIC maintains a conservative investment allocation strategy with cash and fixed income securities representing 66 percent and 19.7 percent of total invested assets respectively at 31 December 2002. This asset allocation ensures that the company has a very liquid balance sheet, which is reflected in the current liquidity ratio that stood at 118.4 percent at year-end 2002. This ratio indicates that the company is well positioned to respond to short-term cash calls.
NLIC is a 98 percent-owned subsidiary of Oman National Investment Corporation Holding SAOG (ONIC), a publicly traded financial services company with interests in insurance, warranty, leasing and other strategic investments. At 31 December 2002, ONIC reported total assets of 42.6 million Omani rials and shareholders' funds of OR17.9 million.
In September 2001, the Capital Markets Authority (CMA) took control of ONIC through a CMA-appointed steering committee. The committee consisting of eminent Omani businessmen has made good progress in turning around the fortunes of the company by focusing on the development of core insurance operations and the divestment of non-core assets.
Signs of the successful implementation of this strategy can already be seen through ONIC's return to profitability, enhanced liquidity, and the removal of debt obligations and related debt servicing requirements. — (menareport.com)
© 2003 Mena Report (www.menareport.com)
