LONDON--(BUSINESS WIRE)--AM Best has affirmed the Financial Strength Rating (FSR) of B++ (Good) and the Long-Term Issuer Credit Rating (Long-Term ICR) of “bbb+” of Saudi Arabian Insurance Company B.S.C. (c) (Damana) (Bahrain). The outlook of the FSR remains stable, while the outlook of the Long-Term ICR remains negative.
The ratings reflect Damana’s balance sheet strength, which AM Best categorises as very strong, as well as its adequate operating performance, limited business profile and appropriate enterprise risk management.
The negative Long-Term ICR outlook continues to reflect adverse trends in the company’s operating performance and uncertainty regarding prospective performance. Although the company’s historical operating performance has been good, the decline of premium a result of a significant reduction in the international medical portfolio has resulted in considerable expense strain on Damana. The company maintains a high expense base to preserve capacity for future growth. Profits in 2017 and 2018 were sustained by non-technical income, which will not recur in 2019 and thereafter. Consequently, prospective performance is likely to be weaker, with a high degree of unpredictability, as the company pursues organic and inorganic growth opportunities.
Damana’s balance sheet strength assessment is underpinned by risk-adjusted capitalisation at the strongest level, as measured by Best’s Capital Adequacy Ratio (BCAR). The company’s underwriting leverage is considered to be very low, and capital requirements are driven largely by asset risk arising from the company’s concentrated investment portfolio that is weighted toward affiliated investments and a group treasury account. The group treasury account generates a guaranteed rate of return and is deposited with Damana’s ultimate parent, Mawarid Holding Company. The company maintains sufficient capital buffers to absorb additional capital requirements that may arise from its strategic initiatives.
Damana reported gross written premiums of USD 56 million in 2018, an 80% decline compared with the previous year, due to the significant reduction in the international medical portfolio. The company maintains a regional presence with operations in Bahrain, United Arab Emirates, Oman and Kuwait. The company also has affiliates and sister companies in Saudi Arabia, Yemen and Lebanon.
This press release relates to Credit Ratings that have been published on AM Best’s website. For all rating information relating to the release and pertinent disclosures, including details of the office responsible for issuing each of the individual ratings referenced in this release, please see AM Best’s Recent Rating Activity web page. For additional information regarding the use and limitations of Credit Rating opinions, please view Understanding Best’s Credit Ratings. For information on the proper media use of Best’s Credit Ratings and AM Best press releases, please view Guide for Media - Proper Use of Best’s Credit Ratings and AM Best Rating Action Press Releases.
AM Best is a global rating agency and information provider with a unique focus on the insurance industry. Visit www.ambest.com for more information.
Copyright © 2019 by A.M. Best Rating Services, Inc. and/or its affiliates. ALL RIGHTS RESERVED.