A.M. Best Affirms Rating for Misr Insurance Co.

A.M. Best Co. has affirmed the financial strength rating of A- (Excellent) of Misr Insurance Company (Egypt). The outlook remains stable. The rating reflects the company’s excellent risk-adjusted capitalization, operating performance and business profile in the Egyptian market.

Excellent risk-based capitalization – A.M. Best believes that Misr’s risk-adjusted capital is excellent as a result of conservative retention levels (40.8 percent in 2002) and off balance sheet strength from its real estate portfolio. However, capital remains subject to risk from the company’s sizeable position in unlisted equities, equivalent to 19 percent of total investments. A.M. Best does not expect risk-adjusted capitalization to improve as Misr is required to distribute 70 percent of its profits to its employees and to the Egyptian government.

Excellent operating performance – A.M. Best believes Misr’s excellent record of strong results will continue and expects the company to report a profit of approximately EGP 200 million (USD 33.4 million) at year-end June 2003. This reflects the company’s selective underwriting and efficient expense structure (20 percent expense ratio in 2002).

Excellent market profile in Egypt – In 2003, A.M. Best expects the company to record strong growth (approximately 25 percent-30 percent) in gross premiums. The Egyptian market is undergoing a period of liberalization, and as a result, it has been opened up to new entrants, ending the monopoly of the Egyptian state-owned companies. During this period, Misr has maintained its position as leader in the non-life market and second-largest participant in the life market. A.M. Best believes that this position will not be substantially eroded in the immediate future. A partially offsetting factor is the company’s dependence upon the Egyptian market for business.