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Cairo: AM Best has affirmed the Financial Strength Rating of B++ (Good) and the Long-Term Issuer Credit Rating (Long-Term ICR) of “bbb” of Misr Life Insurance Company (MLI). The outlook of these Credit Ratings (ratings) is stable. MLI is the life insurance subsidiary of Misr Insurance Holding Company (MIHC).
The ratings reflect MLI’s balance sheet strength, which AM Best categorises as very strong, as well as its adequate operating performance, neutral business profile and appropriate enterprise risk management. The ratings also factor in the financial strength of MIHC, due to MLI’s strategic importance to the group.
MLI’s balance sheet strength assessment is underpinned by its risk-adjusted capitalisation at the strongest level, as measured by Best’s Capital Adequacy Ratio (BCAR). The company’s risk-adjusted capitalisation is supported by considerable amounts of soft capital, including discretionary bonus reserves and unrealised gains on its real estate portfolio. AM Best expects MLI’s BCAR scores to remain comfortably above the minimum required for the strongest assessment, supported by good internal capital generation.
MLI has a track record of adequate operational performance, as evidenced by a five-year (2016-2020) weighted average return on equity (ROE) of 15.8%. Overall performance has been improving in recent years, with MLI reporting a ROE of 21.0% for the fiscal year ending 30 June 2020 (FY 2020). Life insurance continues to contribute positively to the company’s overall profitability, accounting for approximately half the net income over the past five years. AM Best projects that the successful execution of the company’s strategic growth plan will continue to support its sustainable operational performance.
MLI has an excellent business profile in its domestic market. The company’s gross written premium increased by 12.7% during FY 2020 to EGP 5.1 billion (USD 313.1 million), supporting its market-leading position in Egypt’s life insurance sector, with a market share of approximately one-third. Management is proactively pursuing a number of strategic initiatives to enhance its business profile. The company recently entered into a new bancassurance agreement with one of Egypt’s largest banks and is developing its direct sales force to improve its distribution capabilities across the country.
© Press Release 2020
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