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The ratings reflect OIC’s strong level of risk-adjusted capitalisation, robust underwriting performance and leading local business profile. Offsetting rating factors include a historically volatile and concentrated investment portfolio and execution risks surrounding a significant corporate wide transformation.
The outlook for OIC’s ratings has been revised to stable following a significant improvement in its investment guidelines and the initiation of numerous initiatives focused on improving risk management, internal procedures and controls.
In light of new investment guidelines and the intentions of senior management,
During the past year, OIC’s senior management team has almost entirely changed. The company’s new personnel bring with them significant experience in both the international and local insurance markets. OIC’s new management team has completed a review of its strategy and all of its functions. Changes implemented or that are underway include: revised investment and underwriting guidelines; a revised reinsurance structure; strengthened internal controls; the centralisation of functions such as pricing, reserving and claims; a revised distribution strategy; and an enhanced enterprise-wide risk management framework. While some of these initiatives may take time to implement, significant steps have already been taken. In the meantime,
OIC’s underwriting performance remained strong in 2011, with the company reporting a combined ratio for non-life business (excluding medical) of 71% (2010: 78%). Offsetting OIC’s good underwriting results was a marginal investment return and significant non-technical expenses. Results for the first half of 2012 indicate a moderate decline in underwriting profitability, although the results are expected to remain good and in line with that of 2010.
OIC has maintained a leading local position despite the significant upheaval of its senior management over the past year. While
Positive actions on OIC’s ratings can arise over the medium term if the company is able to develop its business profile in line with its business plans and embed sophisticated enterprise-wide risk management within management’s decision making process, while at the same time reducing various concentration risks, maintaining a strong level of risk-adjusted capitalisation and good profitability. There will be negative pressure on OIC’s ratings if it is unable to maintain its current good level of risk-adjusted capitalisation, financial performance or business profile.
The methodology used in determining these ratings is Best’s Credit Rating Methodology, which provides an extensive explanation of A.M. Best’s rating process and contains the different rating criteria employed in the rating process. Key criteria utilised include: “Risk Management and the Rating Process for Insurance Companies”; “Assessing Country Risk”; and “Understanding Universal BCAR”. Best’s Credit Rating Methodology can be found at www.ambest.com/ratings/methodology.
In accordance with Regulation (EC) No. 1060/2009, the following is a link to required disclosures: A.M. Best
Copyright © 2012 by A.M. Best Company, Inc.ALL RIGHTS RESERVED.
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