Oman-Mubasher: Moody's Investors Service (Moody's) has upgraded its rating for the Oman’s Al Madina Insurance Company from Ba2 to Ba1 for the insurance financial strength rating (IFSR), with the outlook ‘positive’

The one-notch upgrade to Ba1 of the IFSR of Al Madina reflects the improvement in profitability which is expected to continue, added to stronger capitalisation following its initial public offer (IPO) in November 2013, as well as Al Madina’s increasing market share in Oman's insurance sector.

“Following the conversion to a Takaful insurer in January 2014, Al Madina's profitability and capitalisation levels improved and we expect further improvement to occur. The company posted a combined ratio (CoR) of 102% and 95% (Moody's basis) in 2012 and 2013 respectively, reporting a significant improvement compared to an average CoR of 122% between 2007-11. Positive underwriting results were also reported in the first nine months of 2014, with a combined ratio of 96%”, Moody’s report revealed.

In Q3-14, Al Madina was the Sultanate’s seventh largest insurer, up from eighth as at YE2013, with a market share of approximately 5%.

"The rating upgrade and the positive rating outlook reflects Al Madina's improving position in the Oman insurance market, which has improved following the completion of the IPO and conversion to Takaful, as well as the improvements in capital adequacy and profitability" says Mohammed Londe, a Moody's Analyst and local market analyst for Al Madina.

On the other hand, Al Madina faces challenges in maintaining the improved underwriting profitability and market share with the threat of new entrants to the Takaful market which may erode Al Madina's market share and pressurise pricing and underwriting conditions.

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