Old Mutual Insurance’s financial strength upgraded


Old Mutual Insurance’s financial strength upgraded

Staff Writer

Old Mutual Insurance Company (OMICO) financial strength rating has been upgraded to an AA, symbolizing its ability to pay claims and maintain a strong market position, Insurance 24 reports.

In a statement, OMICO said the rating symbolised the strength in its financial profile and ability to pay claims and strong market position exhibited and sustained over the past three turbulent years,

“We are pleased to announce that Old Mutual Insurance Company’s (OMICO) financial strength rating has been upgraded by Global Credit Rating Agency to an AA(zw) rating with a stable outlook,” the company said.

It noted that OMICO’s International rating has been steadily improving over the past three years from A- of 2020 to AA- of 2021 to the current AA rating of 2022.

“We are delighted that the rating reflects the following, sustained improvement in earnings and competitive position, a well-diversified business mix which shows a strong offering and active thrust to meet customer needs and strong risk, compliance, governance, and capital management frameworks’ the company said .

OMICO added that as it grew strength to strength, it was committed to continuously providing you with exceptional products and ensuring the highest service excellence.

Meanwhile GCR Ratings in its statement said the Stable Outlook reflects expectations that risk adjusted capitalization and liquidity will be maintained within a strong range, sufficient to absorb potential earnings moderation stemming from unfavorable claims experience and the effects of hyperinflation.

“The business profile is expected to remain relatively unchanged, with market share expected to slightly improve, while the business mix is not expected to change materially over the rating horizon.

The business profile is viewed to be credit positive, reflecting a recovery in market share to 15% (FY20: 14.7%; FY19: 11.7%; FY17: 16%) and relative market share to 2.9x (FY20: 2.6x: FY19: 2.1x; FY17: 3.2x).

This was supported by growth in foreign denominated policies, thus propelling the insurer to the top position in the local short-term insurance industry.

Furthermore, the business mix is viewed to be well diversified with four lines of business contributing materially to revenue, albeit partially offset by limited geographic diversification.

The insurer’s market share is expected to slightly improve over the rating horizon, supported by increased cross-selling opportunities within the group, while policyholder diversification is likely to improve with the on boarding of retail policyholders.’ GCR said

GCR added that the insurer’s liquidity profile strengthened on the back of sound internal cash generation.

“While this implied a comparatively higher exposure to risky assets, attendant value preservation benefits secured an increase in cash and stressed financial assets coverage of net technical liabilities to 3.3x at FY21(FY20: 2.4x), with coverage of operational cost requirements maintained at 9 months. We expect the insurer to maintain liquidity metrics within the current range over the rating horizon,” GCR noted