Moody’s upgrades Arab Misr Insurance Group to Ba3

CAIRO – 15 February 2018: Moody’s Investors Service upgraded the insurance financial strength rating (IFSR) of Arab Misr Insurance Group (GIG) to Ba3 from B1.

Moody’s added in a report published Thursday that it kept its outlook for the group at stable.

The reasons behind this upgrading are the growing importance of the Egyptian operation to GIG in terms of underwriting results and closer integration with GIG, resulting in a higher level of support from the Group, according to Moody’s report.

The report added that GIG Egypt represented 5 percent of GIG's premiums but a high 24 percent of net profit for the Group, based on preliminary results of 2017.

Moody’s clarified that the stable outlook on GIG Egypt reflects their expectation that it will maintain its growth and already strong market position and brand, whilst delivering strong results.

The report stated that the Group support is the key factor for having GIG Egypt IFSR three notches above the Egyptian sovereign rating (B3, Stable) as well as above the stand-alone credit profile of the company.

According to Moody's, GIG Egypt's rating could be upgraded if there is an upgrade of the sovereign rating of Egypt; and/or GIG Egypt is able to invest in higher credit quality assets, resulting in a high risk assets percentage of shareholders' equity of below 175 percent.

The rating agency added that the rating could come under negative pressure if there is a downgrade of the sovereign rating of Egypt; and/or GIG Egypt starts to lose market share and position; and/or there is deterioration in profitability with combined ratio consistently above 100 percent or return on capital below 5 percent; and/or there is a reduction in the support from GIG.

In January, Moody's expected growth in Egypt to accelerate from 4.2 percent in 2017 to around 5 percent by 2019 and 5.5 percent by 2021.

Arab Misr Insurance Group is an Egyptian Insurance company established in 1994 under the Egyptian Insurance Law No. 10 of 1981, GIG is a member of the Egyptian Insurance Federation.