AM Best Assigns Credit Ratings to Egyptian Takaful Property & Liability Insurance Company (Egyptian Joint Stock Company)
July 29 2024 - 10:00AM
Business Wire
AM Best has assigned a Financial Strength Rating of B-
(Fair) and a Long-Term Issuer Credit Rating of “bb-” (Fair) to
Egyptian Takaful Property & Liability Insurance Company
[Egyptian Joint Stock Company] (EGTAK) (Egypt). The outlook
assigned to these Credit Ratings (ratings) is stable.
The ratings reflect EGTAK’s balance sheet strength, which AM
Best assesses as strong, as well as its adequate operating
performance, limited business profile, and marginal enterprise risk
management (ERM).
EGTAK’s balance sheet strength is underpinned by its
risk-adjusted capitalisation at the very strong level, as measured
by Best’s Capital Adequacy Ratio (BCAR), for the fiscal year-end 30
June 2023 (fiscal-year 2023). AM Best assesses the company’s
risk-adjusted capitalisation on a combined basis, including its
policyholders’ and shareholders’ funds, due to the stated mandate
within its articles of association that require the shareholders’
fund to support the policyholders’ fund. AM Best expects the
company’s BCAR to strengthen through continued capital
contributions from its shareholders and solid internal capital
generation.
EGTAK’s capital consumption is driven primarily by its
investment portfolio, which is predominantly composed of Egyptian
sovereign bonds. Despite the company's relatively conservative
investment allocation by asset class, the quality of assets is
considered weak given the concentration in Egypt, where there is a
high level of economic and political risks and a very high level of
financial system risk.
EGTAK’s operating performance is assessed as adequate, with the
company reporting a five-year (2019-2023) weighted average
return-on-equity ratio and combined operating ratio of 25.5% and
96.2%, respectively. The company’s recent underwriting results have
been affected by adverse loss experience in the credit insurance
line of business; however, measures have been implemented to
remediate performance. Whilst the company has been profitable on an
overall basis, challenging macroeconomic conditions in Egypt,
primarily high inflation, persist.
The business profile assessment reflects EGTAK’s position as a
mid-tier Takaful insurer in Egypt, with a non-life market share of
approximately 4% in fiscal-year 2023. However, the company’s
profile is limited to operating within Egypt, and, on a net premium
basis, its portfolio is moderately concentrated in credit
insurance.
In recent years, EGTAK has undertaken steps to formalise its ERM
function and promote a risk-aware culture across the organisation.
AM Best expects that further improvements in EGTAK’s ERM framework
and practices will support the company as it executes its strategic
business plan.
This press release relates to Credit Ratings that have been
published on AM Best’s website. For all rating information relating
to the release and pertinent disclosures, including details of the
office responsible for issuing each of the individual ratings
referenced in this release, please see AM Best’s Recent Rating
Activity web page. For additional information regarding the use and
limitations of Credit Rating opinions, please view Guide to Best’s
Credit Ratings. For information on the proper use of Best’s Credit
Ratings, Best’s Performance Assessments, Best’s Preliminary Credit
Assessments and AM Best press releases, please view Guide to Proper
Use of Best’s Ratings & Assessments.
AM Best is a global credit rating agency, news publisher and
data analytics provider specialising in the insurance industry.
Headquartered in the United States, the company does business in
over 100 countries with regional offices in London,
Amsterdam, Dubai, Hong Kong, Singapore and Mexico City. For more
information, visit www.ambest.com.
Copyright © 2024 by A.M. Best Rating
Services, Inc. and/or its affiliates. ALL RIGHTS RESERVED.
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Stanislav Stoev, ACCA, CFA Senior Financial
Analyst +44 20 7397 0306
stanislav.stoev@ambest.com Christopher Sharkey
Associate Director, Public Relations +1 908 882 2310
christopher.sharkey@ambest.com Jessica Botelho-Young, CA
Associate Director, Analytics +44 20 7397 0310
jessica.botelho-young@ambest.com Al Slavin Senior Public Relations
Specialist +1 908 882 2318 al.slavin@ambest.com