LONDON--(BUSINESS WIRE)--AM Best has assigned a Financial Strength Rating of A (Excellent) and a Long-Term Issuer Credit Rating of “a” (Excellent) to AXA Insurance (Gulf) B.S.C.(c) (AXA Gulf) (Bahrain). The outlook assigned to these Credit Ratings (ratings) is stable.
The ratings reflect AXA Gulf’s balance sheet strength, which AM Best assesses as very strong, as well as its strong operating performance, neutral business profile and appropriate enterprise risk management (ERM). On 7 September 2021, AXA Gulf announced that it had expanded its 32% stake in AXA Cooperative Insurance Company (AXA KSA) to 50%. However, the company chose not to consolidate AXA KSA.
AXA Gulf’s balance sheet strength assessment reflects its risk-adjusted capitalisation, which was at the strongest level at year-end 2020, as measured by Best’s Capital Adequacy Ratio (BCAR). The company’s conservative asset allocation, low reliance on reinsurance and prudent reserving practices support its balance sheet strength. An offsetting factor is country risk. Although the majority of the company’s premiums and assets on a consolidated basis relate to countries that are considered by AM Best to have low to moderate economic, political and financial system risk, exposures in Oman and Bahrain carry high economic and financial system risk.
AXA Gulf’s strong operating performance assessment considers its history of strong overall profitability, with a five-year (2016-2020) weighted average return-on-equity ratio of 10.7% and a combined ratio of 96.4%. The company’s business is moderately diversified by geography and line of business, and it has defensible competitive positions in Saudi Arabia (through AXA KSA), the United Arab Emirates, Qatar, Oman and Bahrain.
AM Best considers the company’s risk management capabilities as sophisticated when compared with its regional peers. AM Best believes that, following the recent acquisition of the company by Gulf Insurance Group K.S.C.P. (GIG), AXA Gulf is well-positioned to execute its strategy within its new organisational structure. However, there is execution risk related to the integration of the company with the GIG group, and associated with the re-branding of its operations.
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