The Capital Market Authority (CMA), the sultanate’s capital market and insurance sector regulator, has issued the credit rating norms for the insurance companies’ investments outside Oman.

A new administrative decision issued by the CMA on Wednesday specified the credit rating for the investment of assets of insurance and takaful companies outside the sultanate.

As per the new decision, Oman-based insurance companies should limit the investment of their assets outside Oman to only those countries, financial institutions and instruments who have a credit rating of at least ‘BBB’ with Standard & Poor’s (S&P) or an equivalent international credit ratings agency.

‘The move comes to enhance the investments of insurance sector and to deal with the economic changes and the ability of the companies to face the investment challenges. In addition, the decision also takes into account the economic value of the local market and the role of insurers and their saving schemes,’ the CMA said in a statement.

It said the decision is based on Article 5 of the Rules for Investment of Assets of Insurance and Takaful Companies which confer on the CMA the power to specify the minimum limit of credit rating for investment instruments as well as the countries and financial institutions.

The CMA’s decision excluded the international bonds issued by the Omani government to encourage the companies to invest in government bonds, beside the unrated shares listed in the stock markets and investment funds. 

The decision gave the insurance companies the discretion to determine their risk appetite when investing in such instruments.

Total investments of Oman’s insurance sector increased by 5.4 per cent to RO669mn at the end of 2020 compared to RO634.79mn in the previous year. Investments of national insurance companies increased by 3.8 per cent to RO414.38mn in 2020 against RO399.19mn in 2019, while investments of Oman-based foreign insurance companies rose by more than 8 per cent to RO254.63mn in 2020 from RO235.6mn a year ago.