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FOR IMMEDIATE RELEASE
LONDON - JULY 15, 2016 09:00 AM (EDT)
A.M. Best has assigned a financial strength rating of B+ (Good) and an issuer credit rating of “bbb-” to Saudi National Insurance Company B.S.C. (C) (SNIC) (Bahrain). The outlook assigned to each rating is stable.
The ratings reflect SNIC’s strong risk-adjusted capitalisation, and its premium and asset base with some regional diversification. Offsetting rating factors include the company’s limited business profile and marginal operating performance.
SNIC is an insurance subsidiary of E.A. Juffali & Brothers, a family owned conglomerate operating in Saudi Arabia. The company also benefits from its other shareholders of Munich Reinsurance Company and Zurich Insurance Company, which provide support and technical guidance to the company. SNIC’s business profile is mainly focused on general insurance and medical health care insurance. The company’s revenues benefit from some regional diversification, with its direct Bahrain business supplemented by inward business from neighbouring markets. Despite SNIC’s access to regional markets, its profile remains modest due to intense competition, with gross written premiums reaching BHD 18.7 million (USD 49.9 million) at year-end 2015.
SNIC has a strong level of risk-adjusted capitalisation, resulting from a low underwriting leverage and an investment profile dominated by high-quality fixed income securities. Additionally, counterparty credit risk arising from low net retention of high value risks is limited by a good-quality reinsurance panel. Risk-adjusted capitalisation is sufficiently strong to absorb its strategic objectives over the next three years, including its plans to inject capital into its Saudi associate company, Wataniya Cooperative Insurance Company (Wataniya). Additionally, the company has focused on maintaining capital adequacy at a strong level with full earnings retention over the past five years.
Due to SNIC’s small profile, coupled with challenging market conditions, its earnings have been volatile and marginal in recent years. The company produced positive net profits in only three of the past five years, which translated into a return of equity of approximately 3% over the period. In 2015, SNIC reported a net loss of BHD 282,000 (USD 754,000). With the exception of 2014, SNIC has produced combined ratios below 95%. Although the company has grown its portfolio over the past two years, the loss ratio has increased to approximately 65%, which is primarily driven by a higher frequency of attritional losses. This has been offset by a marked reduction in the expense ratio. Furthermore, additional volatility is created by its investment in Wataniya.
This press release relates to rating(s) that have been published on A.M. 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 A.M. Best’s Recent Rating Activity web page.
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