Misr Insurance Company (MIC), Egypt's biggest non-life insurer, has a track record of robust operating performance, notes AM Best.
This track record is demonstrated by a five-year (2020-2024) weighted average return-on-equity and combined ratio of 11.6% and 96.0% (as calculated by AM Best), respectively.
The company’s investment results remain the primary contributor to earnings, supported by the high-interest rate environment in Egypt, accounting for approximately 95% of pre-tax profits over the last five years.
Ratings affirmed
AM Best has affirmed the Financial Strength Rating of ‘B++ ‘(Good), the Long-Term Issuer Credit Rating of ‘bbb”’(Good) and the Egypt National Scale Rating (NSR) of ‘aaa.EG’ (Exceptional) of MIC. The outlook of these credit ratings is Stable.
Balance sheet strength
The ratings reflect MIC’s balance sheet strength, which AM Best assesses as very strong, as well as its adequate operating performance, neutral business profile and appropriate enterprise risk management (ERM).
MIC’s balance sheet strength is underpinned by its risk-adjusted capitalisation at the strongest level, as measured by Best's Capital Adequacy Ratio (BCAR). AM Best expects the company’s BCAR score to remain comfortably above the minimum level required for the strongest assessment, supported by good internal capital generation and low underwriting leverage.
Despite MIC’s relatively conservative investment allocation by asset class, AM Best considers the quality of its assets to be weak given the company's concentration in Egypt, which exposes MIC’s balance sheet to potential volatility. The balance sheet strength assessment also factors in the company’s moderate dependence on reinsurance and material unrealised gains reported through Other Comprehensive Income, which strengthens capital and surplus.
Business profile
MIC is the non-life insurance subsidiary of state-owned Misr Insurance Holding Company (MIHC). MIC has an excellent position in its domestic market. The company’s gross written premiums increased by 58.6% to EGP22.2bn ($438m) during the fiscal year ended 30 June 2024 (FY2024). Despite the macroeconomic pressures, the company maintained its market-leading position in Egypt’s non-life insurance sector, with a market share of approximately 40%. Whilst business is concentrated in Egypt, the company benefits from a modest level of geographic diversification stemming from its regional inwards facultative business, which accounted for approximately 15% of premium revenue during FY2024.
In recent years, MIC has implemented tools that enable it to reliably manage its risk exposures and formalise its risk management framework. The ERM assessment takes into account AM Best’s expectation that MIC will continue to develop and integrate its risk management framework to adapt to the evolving risk landscape.