MUSCAT: International ratings agency Fitch Ratings has revised the outlook on Oman Reinsurance Company SAOC's (Oman Re) Insurer Financial Strength (IFS) rating to stable from negative and affirmed the IFS rating at 'BB+'.
The rating actions follow the revision of the Outlook on Oman's 'BB-' Long-Term Local-Currency Issuer Default Rating (LC IDR) to Stable and subsequent similar rating actions on several major Omani banks, it said.
“The rating action reflects Oman Re's significant exposure to Omani assets. Slightly over half of Oman Re's total investments were cash deposits at Omani banks at end-2021, 6 per cent was invested in local-currency bonds and 29 per cent in US dollar-denominated government bonds. Oman Re has a diversified investment portfolio to reduce concentration risk but we expect the exposure to Omani assets to remain significant and to continue to drive the rating in the medium term,” said Fitch.
It noted that Oman Re has maintained good profitability with a combined ratio of 101.4 per cent for 9M21 (9M20: 97.5 per cent) despite the impact of large losses including Cyclone Shaheen and other power and energy losses.
F”itch expects Oman Re's capital position to have remained 'Adequate', based on our Prism Factor-Based Model (FBM) score, at end-2021 (end-2020: 'Adequate'), it stated.
The revision of the outlook of Oman's sovereign rating reflected improvements in, and the expected evolution of key fiscal metrics, including government debt/GDP and the budget deficit, driven by higher oil prices and fiscal reforms, and a lessening of external financing pressures relative to recent years even as external funding needs remain high.
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