A.M. Best has affirmed the financial strength rating of A- (Excellent) and the issuer credit rating of “a-” of Trust International Insurance & Reinsurance Company B.S.C. (c) Trust Re (Trust Re) (Bahrain). The outlook for both ratings remains stable.
The ratings reflect Trust Re’s good risk-adjusted capitalisation, track record of strong operating performance and developing business profile.
Trust Re’s risk-adjusted capitalisation strengthened during 2013, remaining at a good level. The improvement reflects a capital injection of USD 40 million and full earnings retention, increasing shareholders’ equity to USD 298 million in 2013. Additionally, the company’s continued drive to de-risk its investment portfolio has reduced capital requirements. Prospective risk-adjusted capitalisation is expected to remain commensurate with the current ratings as further de-risking of the investment portfolio and high earnings retention supports underwriting growth.
Trust Re has a track record of strong operating performance with annual pre-tax profits of between USD 13.1 million and USD 19.5 million reported over the past five years, equating to an average return on equity of 7.5%. Disciplined risk selection and a prudent reserving policy have enabled the company to generate robust technical results, evidenced by a five-year average combined ratio below 95%. Although investment returns remain low yield, they continue to account for a significant proportion of overall earnings.
Trust Re has a developing business profile as a specialist underwriter of energy and property reinsurance across the Arab, Afro-Asian and Eastern European markets, strengthened by its long-standing relationships with key cedents. In addition, the company benefits from its exposure to the Lloyd’s market via its investment in Trust Underwriting Limited (a corporate member at Lloyd’s). Going forward, the composition of Trust Re’s underwriting portfolio is not expected to change materially in the short term; however, some geographic diversification is anticipated as the company looks to grow its presence in certain Asian and African markets.
A.M. Best believes that the ratings for Trust Re are appropriately positioned at their present level. Negative rating pressure could arise from a significant decline in risk-adjusted capitalisation or a prolonged deterioration in operating performance.
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.
In accordance with Regulation (EC) No. 1060/2009, the following is a link to required disclosures: A.M. Best Europe - Rating [..].
This rating announcement has been issued by A.M. Best Europe – Rating Services Limited, which is a subsidiary of A.M. Best Company. A.M. Best Company is the world's oldest and most authoritative insurance rating and information source. For more information, visit www.ambest.com.
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