AM Best has affirmed the Financial Strength Rating of B- (Fair), the Long-Term Issuer Credit Rating of “bb-” (Fair) and the Egypt National Scale Rating (NSR) of aa+.EG (Superior) of Egyptian Takaful Properties and Liabilities Insurance Company (Egyptian Joint Stock Company) (EGTAK) (Egypt). The outlook of these Credit Ratings (ratings) is stable.

The ratings reflect EGTAK’s balance sheet strength, which AM Best assesses as strong, as well as its adequate operating performance, limited business profile and marginal enterprise risk management (ERM).

EGTAK’s balance sheet strength is underpinned by its risk-adjusted capitalisation at the very strong level, as measured by Best’s Capital Adequacy Ratio (BCAR), for the fiscal year-end 30 June 2024 (fiscal-year 2024). AM Best assesses the company’s risk-adjusted capitalisation on a combined basis, including its policyholders’ and shareholders’ funds, due to the stated mandate within its articles of association that require the shareholders’ fund to support the policyholders’ fund. AM Best expects the company’s BCAR to strengthen through continued capital contributions from its shareholders and solid internal capital generation.

EGTAK’s capital consumption is driven primarily by its investment portfolio, which is composed predominantly of Egyptian sovereign bonds. Despite the company’s relatively conservative investment allocation by asset class, the quality of assets is considered weak given the concentration in Egypt, where there is a high level of economic and political risk and a very high level of financial system risk.

AM Best assesses EGTAK’s operating performance as adequate, with the company reporting a five-year (2020-2024) weighted average return-on-equity ratio and combined operating ratio of 24.7% and 98.5%, respectively. Whilst the company has been profitable on an overall basis, challenging macroeconomic conditions in Egypt, primarily high inflation, persist.

The business profile assessment reflects EGTAK’s position as a mid-tier takaful insurer in Egypt, with a non-life market share of approximately 5% in fiscal-year 2024. However, the company’s profile is limited to operating within Egypt, and is moderately concentrated in the oil and gas, and credit insurance lines, which accounted for 31.81% and 21.82% of gross written premium in fiscal-year 2024, respectively.

In recent years, EGTAK has undertaken steps to formalise its ERM function and promote a risk-aware culture across the organisation. AM Best expects that further improvements in EGTAK’s ERM framework and practices will support the company as it executes its strategic business plan.

This press release relates to Credit Ratings that have been published on AM Best’s website. For all rating information relating to the release and pertinent disclosures, including details of the office responsible for issuing each of the individual ratings referenced in this release, please see AM Best’s Recent Rating Activity web page. For additional information regarding the use and limitations of Credit Rating opinions, please view Guide to Best’s Credit Ratings. For information on the proper use of Best’s Credit Ratings, Best’s Performance Assessments, Best’s Preliminary Credit Assessments and AM Best press releases, please view Guide to Proper Use of Best’s Ratings & Assessments.

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