Best’s News & Research Service - December 05, 2019 12:39 PM (EST)
AM Best Affirms Credit Ratings of The Bahrain National Insurance Company BSC (c)
- December 05, 2019 12:39 PM (EST)
London //BestWire// - AM Best has affirmed the Financial Strength Rating of B++ (Good) and the Long-Term Issuer Credit Rating of “bbb+” of The Bahrain National Insurance Company BSC (c) (BNI) (Bahrain). The outlook of these Credit Ratings (ratings) is stable.
The ratings reflect BNI’s balance sheet strength, which AM Best categorises as very strong, as well as its strong operating performance, limited business profile and appropriate enterprise risk management.
BNI’s balance sheet strength is underpinned by risk-adjusted capitalisation at the strongest level, as measured by Best’s Capital Adequacy Ratio (BCAR), good liquidity and financial flexibility. Offsetting factors include a moderate reinsurance dependence and the reserve strengthening required in 2017 and 2018 following an external actuarial review, which led to more conservative reserving practices for the company. AM Best expects BNI’s BCAR to remain comfortably at the strongest level over the medium term. However, significant exposure to equities and other unlisted securities (BHD 13.5 million, or 64% of shareholders’ equity at the end of 2018) makes the company’s risk-adjusted capitalisation susceptible to volatility.
Although BNI’s operating performance has weakened over the past couple of years, the company has a track record of strong technical and financial profitability, illustrated by a five-year average (2014-2018) combined ratio and return on equity of 93.8% and 10.6%, respectively. After the company’s combined ratio peaked at 106.2% in 2017, management increased rates and took a series of actions to contain claim costs and rationalise the portfolio. As a result, AM Best expects BNI’s technical profitability to improve from 2019 and remain supportive of a strong operating performance assessment through the cycle.
BNI has a well-established franchise in its domestic insurance market, which is underpinned by its leading position in the motor line of business. Although it benefits from a strong brand and good reputation locally, the company’s business profile is constrained by its concentration in Bahrain, which has a small insurance market that offers only limited growth opportunities.
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 credit rating agency, news publisher and data provider specialising in the insurance industry. The company does business in more than 100 countries. Headquartered in Oldwick, NJ, AM Best has offices in cities around the world, including London, Amsterdam, Dubai, Hong Kong, Singapore and Mexico City.