LONDON--(BUSINESS WIRE)--A.M. Best has affirmed the Financial Strength Rating of B+ (Good) and the Long-Term Issuer Credit Rating of “bbb-” of SNIC Insurance B.S.C. (c) (SNIC) (Bahrain). The outlook of these Credit Ratings (ratings) remains stable.
The ratings reflect SNIC’s strong risk-adjusted capitalisation. Offsetting rating factors include the company’s limited business profile and marginal operating performance.
SNIC has a strong level of risk-adjusted capitalisation, resulting from a low underwriting leverage and a relatively conservative investment strategy. Additionally, a reinsurance panel of good credit quality limits counterparty credit risk arising from low net retention of high value risks. A.M. Best expects SNIC’s risk-adjusted capitalisation to remain sufficiently strong to absorb any potential volatility from the company’s strategic initiatives over the next few years, supported by good internal capital generation.
SNIC is an insurance subsidiary of E.A. Juffali & Brothers, a family owned conglomerate operating in Saudi Arabia. The company benefits from support and technical guidance provided by its other shareholders, Munich Reinsurance Company and Zurich Insurance Company. SNIC’s business profile remains focused on general insurance and medical health care insurance. The company’s revenues benefit from some regional diversification, with its direct Bahraini business supplemented by inward facultative business from neighbouring markets. Despite SNIC’s access to regional markets, its profile remains modest due to intense competition, with gross written premiums reaching BD 17.7 million (USD 47.2 million) at year-end 2016.
SNIC’s operating performance is considered marginal. The company reported net profits in four out of the past five years (2012-2016), which translated into a modest return on equity of 3% over the period. These returns are driven by the company’s small profile and challenging market conditions. In 2016, SNIC reported a profit of BD 1,065 thousand (USD 2,846 thousand) compared with a loss of BD 282 thousand (USD 754 thousand) in 2015, following an increase in SNIC’s share of profits from its associates. SNIC has maintained a five-year average combined ratio of 96%. In 2016, the company’s loss ratio deteriorated by two points to 66% due to higher levels of attritional losses on its motor line of business; however, this was somewhat offset by a one point reduction in the company’s expense ratio. Going forward, A.M. Best expects that SNIC’s operating performance will remain constrained due to prevailing tough market conditions and lack of scale.
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