LONDON--(BUSINESS WIRE)--A.M. Best has affirmed the Financial Strength Rating of A- (Excellent) and the Long-Term Issuer Credit Rating of “a-” of Bahrain Kuwait Insurance Company B.S.C. (gig-Bahrain) (Bahrain). The outlook of these Credit Ratings (ratings) remains stable.
The ratings reflect gig-Bahrain’s balance sheet strength, which A.M. Best categorises as very strong, as well as its strong operating performance, neutral business profile and appropriate enterprise risk management. The ratings also factor in the financial strength of gig-Bahrain’s parent company, Gulf Insurance Group K.S.C.P. (GIG), due to its strategic importance to the group.
gig-Bahrain’s balance sheet strength is underpinned by consolidated risk-adjusted capitalisation, which remained at the strongest level as at year-end 2017, as measured by Best’s Capital Adequacy Ratio (BCAR). Despite the increase in underwriting and investment risks resulting from the acquisition of Takaful International Company BSC (TIC) during the first half of 2017, gig-Bahrain’s consolidated capital position is sufficiently robust to absorb the increased capital requirements. The consolidated balance sheet benefits from a relatively conservative asset allocation and a well-rated reinsurance panel, which mitigates the heightened credit risk associated with the company’s high cessions on commercial risks. A.M. Best expects consolidated risk-adjusted capitalisation to remain at the strongest level over the medium-term.
The operating performance assessment of strong takes into account gig-Bahrain’s excellent track record of generating technical and operating profits, reporting a five-year (2013-2017) average combined ratio of 79% on a standalone basis. TIC’s technical profitability has not been as strong historically, however gig-Bahrain has introduced its underwriting philosophy to the subsidiary and A.M. Best expects TIC’s prospective performance to improve. gig-Bahrain reported a consolidated combined ratio of 94% as at year-end 2017, temporarily elevated as a result of large losses incurred during the year, combined with an increased expense ratio attributed to consolidation expenses. A.M. Best expects operating performance to improve prospectively, as gig-Bahrain aligns its core business functions and achieves synergies with the subsidiary.
The business profile assessment of neutral reflects gig-Bahrain’s market-leading position in Bahrain’s insurance market and its strong position in Kuwait. gig-Bahrain maintains an excellent domestic franchise, which has been further strengthened following its acquisition of TIC. The company operates in Bahrain and Kuwait and writes a well-diversified portfolio on a gross premium basis; however, on a net premium basis, its portfolio is heavily concentrated toward motor risks.
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