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A.M. Best Downgrades Issuer Credit Rating of Trade Union Cooperative Insurance Company – A Saudi Joint Stock Company


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© Business Wire 2014
2014-04-02 16:02:03 -

A.M. Best has downgraded the issuer credit rating (ICR) to “bbb” from “bbb+” and affirmed the financial strength rating of B++ (Good) of Trade Union Cooperative Insurance Company – A Saudi Joint Stock Company (TUCI) (Saudi Arabia). The ratings have been placed under review with negative implications.

The ICR downgrade is driven primarily by TUCI’s weakened capital position, resulting from high levels of premium growth coupled with significant reserve strengthening. The status of under review with negative implications reflects concerns that the company may be unable to stabilise risk-adjusted capitalisation over the medium term.

During 2013, TUCI grew its gross written premium by 56% to SAR 877 million (USD 234 million). In the same year, an overall loss of SAR 43 million

(USD 11.4 million) resulted in a 14% reduction in capital and surplus, which fell to SAR 269 million (USD 72 million). Although a material proportion of underwriting losses during 2013 can be attributed to new reserving requirements prescribed by the local regulator, the primary driver of weakened capitalisation was excessive business growth.

The ratings will remain under review pending A.M. Best’s assessment of TUCI’s revised business plans and prospective risk-adjusted capitalisation. TUCI is taking substantial corrective measures in order to improve technical performance. As a result, more favourable underwriting results are anticipated in 2014.

Furthermore, it is likely that TUCI will be able to stabilise its level of risk-adjusted capitalisation over the next two years without raising additional capital.

If TUCI is unable to stabilise its level of risk-adjusted capitalisation and financial performance, there could be negative rating actions.
Upward movement in TUCI’s rating is unlikely at present.

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 .. .


In accordance with Regulation (EC) No. 1060/2009, the following is a link to required disclosures: A.M.

Best Europe - Rating Services Limited Supplementary Disclosure : cts.businesswire.com/ct/CT?id=smartlink&url=http%3A%2F%2Fwww .. .


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 : cts.businesswire.com/ct/CT?id=smartlink&url=http%3A%2F%2Fwww .. .

Copyright © 2014 by A.M. Best Company, Inc. ALL RIGHTS RESERVED.

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A.M. BestTim Prince, +(44) (0) 20 7397 0320Associate

Director, Analytics timothy.prince@ambest.com : mailto:timothy.prince@ambest.com orMahesh

Mistry, +(44) (0) 20 7397 0325Director, Analytics mahesh.mistry@ambest.com : mailto:mahesh.mistry@ambest.com orRachelle

Morrow, +1 908-439-2200, ext. 5378Senior Manager, Public Relations rachelle.morrow@ambest.com : mailto:rachelle.morrow@ambest.com orJim
Peavy, +1 908-439-2200, ext. 5644Assistant Vice President, Public
Relations james.peavy@ambest.com : mailto:james.peavy@ambest.com


Author:
Hossam Abdel-Kader
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