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FOR IMMEDIATE RELEASE
LONDON - AUGUST 28, 2015 09:22 AM (EDT)
A.M. Best has downgraded the financial strength rating (FSR) to B++ (Good) from A- (Excellent) and the issuer credit rating (ICR) to "bbb+" from "a-" of The Mediterranean & Gulf Insurance & Reinsurance Company (Medgulf) B.S.C. (c) (Medgulf Bahrain) (Bahrain) and The Mediterranean and Gulf Cooperative Insurance and Reinsurance Company (A Saudi Joint Stock Company) (Medgulf KSA) (Saudi Arabia). Concurrently, A.M. Best has affirmed the FSR of B++ (Good) and the ICR of "bbb+" of The Mediterranean & Gulf Insurance and Reinsurance Company S.A.L. (MEDGULF) (Medgulf Lebanon) (Lebanon). The outlook on the FSRs and ICRs for Medgulf Bahrain and Medgulf Lebanon all remain stable. The outlook for the ICR for Medgulf KSA has been revised to negative from stable, while the outlook for the FSR remains stable.
The rating downgrades to Medgulf Bahrain and Medgulf KSA reflect deterioration in the capital position at both of these entities. This follows reserve strengthening at Medgulf KSA, which has led to a material underwriting loss recorded in the first half of 2015. In addition, risk-adjusted capitalisation at both of these entities has trended downwards over the past two years due to adverse reserve development booked in 2013, following a regulatory shift in reserving practices, coupled with elevated levels of underwriting growth. Going forward, it is A.M. Best's expectation that Medgulf Bahrain will look to rebuild its capital position through strong retained earnings and controlled growth in underwriting. However, Medgulf KSA's standalone risk-adjusted capitalisation is expected to remain weak with any further deterioration in capital adequacy likely to drive downward pressure on the current ratings.
The rating affirmations on Medgulf Lebanon reflect the company's market leading position in Lebanon, its solid level of risk-adjusted capitalisation and its improving technical performance. The company has reported better than budgeted half year 2015 results.
The ratings of all Medgulf entities continue to benefit from the financial strength of the group. The ratings of Medgulf KSA and Medgulf Lebanon benefit from rating enhancement from Medgulf Bahrain, reflecting their strategic importance to the group. The ratings of the subsidiaries may be affected by a change in the standalone rating fundamentals of the companies or A.M. Best's view of their strategic importance to the group.
In accordance with Regulation (EC) No. 1060/2009, the following is a link to required disclosures: A.M. Best Europe - Rating Services Limited Supplementary Disclosure.
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 visit A.M. Best's Ratings & Criteria Center.
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