LONDON--(BUSINESS WIRE)--AM Best has affirmed the Financial Strength Rating of B+ (Good) and the Long-Term Issuer Credit Rating (Long-Term ICR) of “bbb-” of SNIC Insurance B.S.C. (c) (Bahrain). The outlook of these Credit Ratings (ratings) remains negative.
The ratings reflect SNIC’s balance sheet strength, which AM Best categorises as very strong, as well as its adequate operating performance, limited business profile and marginal enterprise risk management.
The negative outlooks reflect the pressure on the balance sheet strength and operating performance following a gradual decline in risk-adjusted capitalisation and weakening technical performance over the past three years. SNIC has undertaken initiatives to restore its capital position and restructure its business offering to improve technical performance. Failure to execute these improvements successfully is likely to result in negative rating actions.
SNIC’s balance sheet strength assessment of very strong is underpinned by its risk-adjusted capitalisation being at the strongest level, as measured by Best’s Capital Adequacy Ratio (BCAR). Offsetting rating factors include the deteriorating trend in the risk-adjusted capitalisation, the company’s high level of reinsurance dependence, which is partly mitigated by a well-rated reinsurance panel, and the concentration of its investment profile in an affiliated company, Wataniya Insurance Company.
SNIC’s adequate operating performance reflects its positive, albeit marginal, earnings generation, with an average five-year return on equity of 3%. In recent years, SNIC’s technical performance has experienced negative trends, with technical losses of USD 0.7 million and 1.6 million in 2017 and 2018. The company has embarked on a strategy to restructure its business model to focus on partnerships with motor dealerships and to offer employee benefit solutions. SNIC met expectations in accordance with its business plan in 2018 and the first half of 2019.
SNIC’s business profile remains focused on motor and medical insurance. The company’s profile benefits from some regional diversification, with its direct Bahraini business supplemented by inward facultative business from neighboring markets. Despite SNIC’s access to regional markets, its business profile remains limited, with a declining trend in gross written premium witnessed over the past three years.
SNIC is an insurance subsidiary of E.A. Juffali & Brothers, a family owned conglomerate operating in Saudi Arabia.
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