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 Misr Life Insurance Company (MLIC) (Egypt). The outlook of these Credit Ratings (ratings) is stable. MLIC is the life insurance subsidiary of Misr Insurance Holding Company (MIHC).

The ratings reflect MLIC’s balance sheet strength, which AM Best assesses as strong, as well as its strong operating performance, neutral business profile and appropriate enterprise risk management. The ratings also benefit, in form of a lift, from MIHC’s financial strength, due to MLIC’s strategic importance to the group.

MLIC’s risk-adjusted capitalisation remained at the strongest level at fiscal year-ended 30 June 2023 (fiscal-year 2023), as measured by Best’s Capital Adequacy Ratio (BCAR), albeit with a reduced buffer to absorb potential shock losses. Following devaluations of the Egyptian Pound in 2023, the company’s asset risk increased materially as the majority of assets are held in local currency and led to a deterioration of the company’s risk-adjusted capitalisation. AM Best expects MLIC’s BCAR scores to remain above the minimum level required for the very strong assessment, supported by its good internal capital generation. The balance sheet strength assessment also factors in the company’s considerable amount of soft capital, including discretionary bonus reserves and unrealised gains on real estate assets.

MLIC has a track record of strong operating performance, as demonstrated by a five-year (2019-2023) weighted average return on equity (ROE) of 18.3%. Overall performance has been consistently strong in recent years, and MLIC reported an ROE of 18.2% for the fiscal-year 2023.

MLIC has an excellent position in its domestic market. The company’s gross written premium increased by 1.9% during fiscal-year 2023 to EGP 9.4 billion. Despite the macroeconomic pressures, the company kept its market-leading position in Egypt’s life insurance sector, where it has a market share of approximately 30%. Management continues to pursue a number of strategic initiatives to enhance its business profile, including expanding its domestic distribution partnerships and its direct sales force.

MLIC is exposed to the high economic, high political and very high financial system risks associated with operating in Egypt, which AM Best views as a partially offsetting factor to the ratings.

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