LONDON--(BUSINESS WIRE)--A.M. Best has affirmed the financial strength rating of B++ (Good) and the issuer credit rating of “bbb” of Bankers Assurance S.A.L. (Bankers) (Lebanon). The outlook for each rating remains stable.
The ratings reflect Bankers’ supportive, yet volatile risk-adjusted capitalisation, track record of solid technical performance and good business profile in the Lebanese market. An offsetting rating factor is Bankers’ concentrated exposure to the economic and political risks associated with operating in Lebanon.
Bankers’ risk-adjusted capitalisation remains supportive of the ratings, despite volatility seen in recent years. After having weakened in 2014, as a result of a significant increase in net underwriting risk, the company’s risk-adjusted capitalisation strengthened in 2015, driven by a notable premium reduction in the medical book of business. The company’s balance sheet strength is however supported by a conservative, highly liquid investment portfolio, albeit geographically concentrated in Lebanon. Prospective risk-adjusted capitalisation is expected to remain at a solid level with robust internal capital generation supporting measured strategic initiatives.
Bankers has a track record of solid technical performance, evidenced by a five-year average combined ratio of 91% at year-end 2014. The company generated a combined underwriting result of LBP 10.4 billion (USD 7.0 million) in 2014, with a loss ratio of 62%. Based on preliminary figures, Bankers expects to report an improved loss ratio of around 58% for 2015, following the non-renewal of a number of significant, underperforming medical accounts.
Bankers’ good business profile in Lebanon is supported by the company’s established franchise and diversified underwriting portfolio in both the life and non-life business segments. Lebanon’s insurance sector has no clear market leader, and, ranked by gross written premium, Bankers occupied second place in the market in 2014, with a market share of approximately 8%. The company is the principal insurance operation of Nasco Insurance Group Limited (Nasco), a large insurance, reinsurance and insurance related services group operating across Europe and the Middle East.
Bankers’ operations in Lebanon expose the company to heightened levels of economic and political risk. Despite Bankers’ track record of solid operating performance in challenging market conditions, the potential for significant business disruption remains elevated. A.M. Best will continue to monitor developments in Lebanon and assess any impact on the company.
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