AM Best Affirms Credit Ratings of Saudi Arabian Insurance Company B.S.C. (c)

LONDON--(BUSINESS WIRE)--AM Best has affirmed the Financial Strength Rating of B+ (Good) and the Long-Term Issuer Credit Rating of “bbb-” (Good) of Saudi Arabian Insurance Company B.S.C. (c) (Damana) (Bahrain). The outlook of these Credit Ratings (ratings) is stable.

The ratings reflect Damana’s balance sheet strength, which AM Best assesses as very strong, as well as its marginal operating performance, limited business profile and marginal enterprise risk management. The ratings also factor in the neutral impact from Damana’s ultimate parent, Mawarid Holding Company.

Damana’s balance sheet strength assessment is underpinned by its risk-adjusted capitalisation, as measured by Best’s Capital Adequacy Ratio (BCAR), that was comfortably at the strongest level at year-end 2024 following the disposal of a large equity holding. AM Best expects the company’s BCAR scores to remain at the strongest level prospectively. AM Best considers Damana’s investment portfolio to be conservative and consists mostly of cash and deposits. An offsetting factor to the assessment is the company’s reliance on reinsurance for high-value risks, which is a common trait in the region; however, credit risk is minimised by a panel of sound credit quality.

AM Best assesses Damana’s operating performance as marginal. The company has struggled with negative underwriting results for several years due to high expenses arising from its operating model and substantially reduced business scale. Loss ratios also have been affected by material events, such as the COVID-19 pandemic and the 2024 Dubai floods. Year-on-year improvements have led to reductions in combined ratios from their peak of 148% in 2021, though underwriting operations remain unprofitable. Over the medium term, as the company steadily expands and dilutes its expense base, underwriting results are expected to trend toward profitability. Investment returns supplement performance, with Damana generating solid returns from its conservatively invested portfolio.

Damana has seen business volumes steadily increase year-on-year since it suffered a reduction of revenues in 2021, following regulatory restrictions imposed by the Central Bank of Bahrain on the company’s operations within that country. AM Best expects this trend in revenue growth to continue into the next few years, supported by Damana’s renewed focus on new lines of business beyond its core lines of motor and medical. This strategy exposes Damana to execution risk given the challenging and competitive conditions in its core markets of Bahrain, the United Arab Emirates, Oman and Kuwait.

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 Guide to Best’s Credit Ratings. For information on the proper use of Best’s Credit Ratings, Best’s Performance Assessments, Best’s Preliminary Credit Assessments and AM Best press releases, please view Guide to Proper Use of Best’s Ratings & Assessments.

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