Misr Insurance Company, Egypt's biggest insurer, has produced a financial performance viewed as good by Fitch Ratings, with a net annualised return on average equity of 14% in the six months ended 31 December 2024 (1HFY25) and averaging 12% over FY21-FY24, driven primarily by investment income.
However, this performance should be viewed against Egypt's high, though moderating, inflation; average monthly inflation in 1HFY25 was 16%, down from 26% in 2HFY24 and 34% in FY24. Underwriting profitability was strong, with a combined ratio of 84% in 1HFY25 and 2HFY24.
Fitch has affirmed Misr Insurance's National Insurer Financial Strength (IFS) rating at 'AAA(egy)'. The outlook is ‘Stable’. The rating reflects Misr Insurance's leading position as the largest insurance company in the Egyptian insurance market, very strong capitalisation, state ownership, good financial performance, and a prudent investment strategy by local standards.
Aside from the investment-driven financial performance, key rating drivers for Misr Insurance include:
Leading Domestic Insurer: Misr Insurance has a leading business franchise and strong competitive advantages within the domestic insurance sector, with total premiums of EGP31bn over the 12 months to July 2025 (about $629m based on the average exchange rate for the period). The company is 100% state-owned by the Sovereign Fund of Egypt for Investment and Development. Fitch believes the company can rely on government support as it remains a very important domestic non-life insurer with a 40% market share and significant positions in such sectors as aviation and oil and gas. However, Fitch does not factor in any support in the analysis.
Very Strong Capital Position: Fitch views Misr Insurance's capitalisation as 'Very Strong', as underlined in Fitch's Global Prism model score of 'Extremely Strong' at end-2HFY24, FYE24 and FYE23. The company's shareholders' funds, including claims equalisation reserve, were EGP69.5bn at end-1HFY25, adjusted from EGP76.6bn at end-2HFY24 following a change in accounting treatment.
Despite this downward revision, Fitch expects the company's Prism model score for FY25 to remain well above 'Strong'. The assessment of Misr Insurance's capital position is further supported by a very high regulatory solvency margin of 22.6x at end-1HFY25 and 21.7x at end-2HFY24, significantly exceeding the minimum required level.
Asset Risk Reflects Operating Environment: Fitch views Misr Insurance's investment strategy as prudent and its investment portfolio as well diversified between cash, equity and debt instruments. However, asset and investment risks remain high, reflecting Egypt's challenging operating environment, characterised by high, albeit decreasing, inflation and low-rated sovereign.
The fixed-income portfolio comprises sovereign debt instruments, while cash is mainly deposited in local banks. Equities are primarily investments in listed and unlisted Egyptian companies. Fitch views Misr Insurance's liquidity position as strong, with liquid assets covering 504% of loss reserves at end-2024.
Strong Panel of Reinsurers: Misr Insurance's reinsurance usage is moderate, with net/gross premiums of 69% in 1HFY25 and 64% in 2HFY24, while the reinsurance share of paid claims was 23% and 18%, respectively.
Fitch views Misr Insurance's reinsurance credit risks as low, considering the high credit quality of its reinsurers. Its reinsurance panel comprises 62% of 'AA' credit rating category and 28% of 'A' category companies and includes catastrophic risk protection under the excess-of-loss treaty.