AM Best affirms B++ rating of Al-Mohandes Insurance
The AM Best insurance rating company has affirmed the B++ financial strength rating of Al-Mohandes Insurance Company, Egypt. The rating is based on the company's very good risk-based capitalization and robust underwriting and financial performance, although Mohandes' business position continues to be challenged by the competitive operating environment. The outlook is stable.
The company maintains very good level of risk-based capital through a conservative balance sheet strategy. In 2002, adjusted capital and surplus increased five percent to 103.3 million Egyptian pounds ($22.3 million) and the quality of the investment portfolio improved following the divestment of several non-performing investment funds. Asset risk is minimized by the conservative weighting of invested assets to fixed deposits and government securities at 82 percent.
Mohandes reported a 15 percent increase in 2002 profits to EP 19 million ($4.1 million), which represented a 5.4 percent return on assets and 18.8 percent return on adjusted equity.
The company's profit-led underwriting strategy has resulted in a 38.5 percent five-year average loss ratio, although this deteriorated to 66.5 percent in 2002 due to an EP 14 million (three million dollar) business interruption claim. This claim could lead to reserve releases if successfully contested in 2003.
Mohandes is the second largest private sector insurance company in Egypt; however its market share of approximately five percent has continued to come under pressure in 2002 due to ongoing liberalization in the sector. Strong, although receding, growth in the life portfolio of 13.6 percent CAGR since 1997 has enabled the company to resist persistent price competition in the non-life market, which has led to a 10 percent reduction in Mohandes' non-life premium since 1999. — (menareport.com)
© 2002 Mena Report (www.menareport.com)