Liva Group SAOG Faces Negative Outlook from AM Best Credit Ratings
Liva Group SAOG Faces New Challenges in Credit Ratings
Recently, AM Best made a significant update concerning Liva Group SAOG by revising its outlook from stable to negative. This adjustment emphasizes deepening concerns regarding the group’s underwriting performance and financial stability.
Overview of Liva Group's Credit Ratings
As per the latest assessment, AM Best has affirmed the Financial Strength Rating of A- (Excellent) and the Long-Term Issuer Credit Rating of “a-” (Excellent) for Liva Group. These ratings reflect the organization's robust consolidated balance sheet strength and its strong operational performance over recent periods.
Current Position and Comparatives
The underlying factors contributing to these ratings include a neutral business profile alongside effective enterprise risk management practices. Moreover, Liva Group’s majority ownership by Oman International Development and Investment Company SAOG positively influences the ratings despite its challenges.
Reasons Behind the Negative Outlook Revision
The revised outlook presents a notable shift in perspective, primarily due to Liva Group's recent underwriting performance, which has consistently underperformed AM Best’s expectations. In the past few years, the group has struggled against external pressures on its balance sheet strength fundamentals. Specifically, while Liva Group has traditionally recorded robust operating performance, this has been undermined by underwriting losses observed in recent years, including significant losses recorded during recent periods.
Recent Performance Insights
In 2024, Liva Group reported an operating loss of OMR 16 million for the first half due to a combination of elevated losses in its motor business and substantial losses caused by flooding in the region. While the company has undertaken actions to improve its earnings, there is potential for further negative rating adjustments if better performance does not materialize in the near future.
Assessment of Balance Sheet Strength
AM Best's analysis of Liva Group's balance sheet strength indicates it is underpinned by robust risk-adjusted capitalization at the highest levels, a measurement that is informed by Best’s Capital Adequacy Ratio (BCAR). However, the anticipated adjustments in the group's financial status could diminish this buffer due to the reported operational losses.
Financial Dynamics
Additionally, the reduction in capital and surplus increases overall financial leverage, particularly following Liva Group's acquisition of Liva Insurance B.S.C. (c). The group’s cautious investment strategies and awareness of the economic and political risks in its core markets—including Oman, the UAE, and Saudi Arabia—also factor into its financial structure.
Diverse Profile of Liva Group SAOG
Liva Group is recognized for its diversified operational profile across various products and geographies, which serves to mitigate some vulnerabilities associated with individual markets. The company holds a leading position in Oman and continues to expand its presence in other Gulf states.
Conclusion and Future Outlook
Moving forward, Liva Group SAOG must focus on restoring its operational performance and maintaining robust capital levels to secure its credit ratings. The ongoing commitment to remedial action and performance improvement is crucial for navigating current challenges and sustaining its market position.
Frequently Asked Questions
What are the current credit ratings of Liva Group SAOG?
AM Best has affirmed a Financial Strength Rating of A- and a Long-Term Issuer Credit Rating of “a-” for Liva Group SAOG.
What led to the negative outlook for Liva Group SAOG?
The negative outlook arises from Liva Group's recent underwriting performance, which has fallen below expectations, accompanied by substantial operational losses.
How has Liva Group's financial situation changed?
The group has experienced increased financial leverage and reduced capital and surplus due to operational losses, affecting its balance sheet strength.
What are Liva Group's key operating markets?
Liva Group operates primarily in Oman, UAE, Saudi Arabia, Bahrain, and Kuwait, focusing on maintaining a diversified portfolio.
What actions is Liva Group taking to improve performance?
Liva Group is executing remedial actions aimed at strengthening earnings and addressing the underlying issues contributing to its recent losses.
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