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Tue 13 Jul 2010 06:57 AM

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S&P upbeat on UAE insurer despite mass resignations

Rating agency says Oman Insurance board change 'not detrimental' to business.

S&P upbeat on UAE insurer despite mass resignations

Standard & Poor's has affirmed its long-term counterparty credit and insurer financial strength ratings on UAE-based insurer Oman Insurance Co.

At the same time, it said it has removed the ratings from CreditWatch with negative implications following its "satisfactory evaluation" of the impact of the unexpected resignation of the company's entire board of directors.

"In our opinion, the resignation of the old board of directors and the appointment of a new board of directors has not been detrimental to the financial and business profile of Oman Insurance and has not undermined its relationship with its parent, Mashreqbank," said Standard & Poor's credit analyst Nigel Bond.

According to S&P's investigations, a change in the audit firm of Oman Insurance may have been one of the reasons for the resignation of the old board, it said in a statement.

"There does not appear to be any suggestion that the company's former audit firm was in any way deficient or inadequate, nor is there any suggestion that the old board of directors had something to hide," Bond said.

He added that it was too early for S&P to have assessed the efficacy of the new board of directors.

"Nevertheless, we believe that the old board's strongest impact was on investments. It had a limited impact on the strategy set by the management team, and we expect this to continue under the new board," he said.

S&P's stable outlook reflected its expectation that Oman Insurance will improve its enterprise risk management, particularly its investment risk management, which should lower the company's risk profile.

"We also assume that the company's underwriting performance will, in the absence of exceptional circumstances, remain very strong in 2010 and 2011, with the net combined ratio continuing to be comfortably better than 90 percent," Bond said, adding: "Meanwhile, we expect Oman Insurance to maintain its strong competitive position as a leading insurer in the UAE."

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