AM Best Revises Outlooks to Negative for Liva Group SAOG

AM Best has revised the outlooks to negative from stable and affirmed the Financial Strength Rating of A- (Excellent) and the Long-Term Issuer Credit Rating of “a-” (Excellent) of Liva Group SAOG (Liva Group) (Oman).

The Credit Ratings (ratings) reflect Liva Group’s consolidated balance sheet strength, which AM Best assesses as very strong, as well as its strong operating performance, neutral business profile and appropriate enterprise risk management. In addition, the ratings factor in a neutral impact from the group’s majority ownership by Oman International Development and Investment Company SAOG.

The revision of the outlooks to negative from stable reflects concerns over Liva Group's underwriting performance, which has been below AM Best's expectations in recent years, as well as pressure on the group’s balance sheet strength fundamentals. Liva Group has a historical record of strong operating performance; however, earnings have deteriorated in recent years underpinned by underwriting losses reported in 2022, 2023 and the first half of 2024, as calculated by AM Best. The group has been experiencing elevated losses in its motor book of business, and more recently, reported large losses arising from floods in the Gulf Cooperation Council region that resulted in it reporting an operating loss of OMR 16 million for half-year 2024. The group is executing remedial actions to strengthen earnings and has demonstrated underlying performance improvements in recent periods; however, should sufficient improvements to performance fail to materialise, a negative rating action may occur.

Liva Group’s balance sheet strength assessment is underpinned by its risk-adjusted capitalisation at the strongest level, as measured by Best’s Capital Adequacy Ratio (BCAR), supported by a track record of good internal capital generation. AM Best expects prospective risk-adjusted capitalisation to remain at the strongest level, albeit with a reduced buffer, primarily due to a reduction in capital and surplus from operating losses reported for half-year 2024. The reduction in capital and surplus in 2024 also increases financial leverage, which has risen following the 2022 acquisition of Liva Insurance B.S.C. (c), formerly known as Royal & Sun Alliance Insurance (Middle East) Limited B.S.C. (c). The balance sheet strength assessment also factors in the group’s conservative investment allocation by asset class and the economic, political and financial system risks associated with Oman, the United Arab Emirates and Saudi Arabia, which are Liva Group’s key operating markets.

Liva Group is deemed to have a well-diversified profile by product and geography. The business profile assessment factors in the group’s leading market position in Oman and its presence in the UAE, Saudi Arabia, Bahrain and Kuwait.

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.

AM Best is a global credit rating agency, news publisher and data analytics provider specialising in the insurance industry. Headquartered in the United States, the company does business in over 100 countries with regional offices in London, Amsterdam, Dubai, Hong Kong, Singapore and Mexico City.

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