2014-03-28 15:34:02 -
A.M. Best has affirmed the financial strength rating of B++ (Good) and issuer credit rating of “bbb” of Takaful International Company B.S.C. (TIC) (Bahrain). The outlook for both ratings remains stable.
The ratings of TIC reflect its sound domestic profile, adequate risk-adjusted capitalisation and robust record of underwriting profitability. Offsetting factors include the company’s marginal overall earnings, basic risk management capability and exposure to volatile asset classes.
TIC is the largest takaful operator and is amongst the top five largest insurers in Bahrain, as measured by gross written premium. The company’s level of risk-adjusted capitalisation is adequate for its ratings, with prospective business growth expected to be sufficiently supported by profit retention. Any future increase in shareholders’ equity is anticipated to be
tempered by TIC’s distribution of policyholder dividends, following the accumulation of surpluses within its takaful funds. Although TIC has generated a modest return on shareholders’ equity in recent years, it has consistently reported underwriting profits. However, the level of underwriting profitability is on a declining trend.
TIC’s basic risk management capability is in line with its relatively small size and low level of complexity. Capital requirements are largely driven by the company’s exposure to volatile asset classes, while capital to support underwriting risk is modest due to TIC’s moderate underwriting leverage.
Downwards rating pressure could arise if there is a material deterioration in TIC’s risk-adjusted capitalisation or financial performance. Substantial strengthening of risk-adjusted capitalisation or a sustained improvement in financial performance could result in positive rating actions.
The methodology used in determining these ratings is Best’s Credit Rating Methodology, which provides a comprehensive explanation of A.M.
Best’s rating process and contains the different rating criteria employed in the rating process. Best’s Credit Rating Methodology can be found at www.ambest.com/ratings/methodology : cts.businesswire.com/ct/CT?id=smartlink&url=http%3A%2F%2Fwww ..
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