2013-12-19 15:06:03 -
A.M. Best Europe – Rating Services Limited has revised the outlook to positive from stable and affirmed the financial strength rating of B++ (Good) and issuer credit rating of “bbb+” of Arab Insurance Group (B.S.C.) (Arig) (Bahrain).
The positive outlook reflects Arig’s improving underwriting performance stemming from enhanced underwriting discipline and risk selection. The ratings also factor in the company’s robust capitalisation and strong regional business profile. Arig’s strong risk-adjusted capitalisation is supported by modest underwriting leverage, moderate asset allocation and conservative reserving.
Arig’s reinsurance portfolio is well diversified both by line of business and geographically. The company is expected to generate combined ratios below 100% in the coming years. In 2013, for the first time, Arig will consolidate the financial results
of Takaful Re Limited’s (Takaful Re) retakaful fund into its own financial statements. Although Takaful Re’s results historically have been weak, they are likely to improve over the short term as Arig adopts tighter control over the underwriting operations of its subsidiary. Arig’s conventional reinsurance portfolio is expected to remain stable in 2014 after several years of volatility, which was driven by the company exiting and entering business relationships with a number of Lloyd’s syndicates.
While maintaining a strong business profile in the Middle East and North Africa (MENA) region, Arig has added diversification to its underwriting portfolio via the London insurance market. Approximately one quarter of the company’s gross written premium relates to the reinsurance of a number of Lloyd’s syndicates that have a focus on specialty lines. The majority of Arig’s reinsurance portfolio is written on a treaty basis and is not heavily exposed to natural catastrophes.
Over the medium term, a strong track record of underwriting profitability and robust risk-adjusted capitalisation could result in a rating upgrade. Failure to maintain underwriting profitability and robust risk-adjusted capitalisation could result in the removal of the positive outlook and potentially add negative pressure to the ratings.
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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