LONDON: A.M. Best has affirmed the Financial Strength Rating of A- (Excellent) and the Long-Term Issuer Credit Rating of “a-” of Arab Insurance Group (B.S.C.) (Arig) (Bahrain). The outlook of these Credit Ratings (ratings) is stable.
The ratings reflect Arig’s balance sheet strength, which is categorised as very strong by A.M. Best, as well as its adequate operating performance, neutral business profile and appropriate enterprise risk management.
Arig maintains a strong brand name in the Middle Eastern and North African reinsurance market, built upon the company’s excellent reputation and its long-standing relationships with cedants. In addition, the company benefits from its exposure to the Lloyd’s market via its investment in Arig Capital Limited (a corporate member at Lloyd’s). Participation in Lloyd’s syndicates that focus on specialty lines represents just under half of the company’s gross written premium. The majority of Arig’s reinsurance portfolio is written on a treaty basis and is not exposed heavily to natural catastrophes. Additionally, following a shareholder decision, Takaful Re Limited ceased underwriting operations in 2015, and its insurance portfolio has been put into runoff since April 2016. A.M. Best believes this decision will allow Arig to focus its strategy on its core segments and higher margin business lines, such as facultative business, consequently improving underwriting profitability.
Arig’s level of risk-adjusted capitalisation has been assessed as strongest in 2017 on a standard and catastrophe-stressed basis, with capital and surplus growing to USD 257 million at year-end 2016 (2015: USD 244 million). A.M. Best expects Arig’s prospective risk-adjusted capitalisation to remain sufficient to absorb the company’s strategic initiatives. Overall balance sheet strength is supported by modest underwriting leverage, conservative asset allocation resulting in a highly liquid portfolio, and prudent reserving.
Whilst Arig has a history of generating good operating profits, reporting a net profit of USD 10 million in 2016, the company has experienced volatility in underwriting results and reported a technical loss on its Lloyd’s and life insurance segments. These losses were offset by profitable facultative accounts and tightened underwriting controls on core non-life business. The company’s non-life underwriting operations returned a combined ratio of 92.9% in 2016. The company’s expense ratio improved in 2016 owing to a larger premium base, reversal of staff incentives and a shift in product mix. Following the implementation of remediation actions, A.M. Best anticipates Arig’s prospective performance to remain stable and to return to technical and operating profitability across all segments. The company has recorded substantial improvements in operating performance in the first nine months of 2017, delivering a net profit of USD 4.1 million and a non-life combined ratio of 89%.© Press Release 2017
The ratings reflect Arig’s balance sheet strength, which is categorised as very strong by A.M. Best, as well as its adequate operating performance, neutral business profile and appropriate enterprise risk management.
Arig maintains a strong brand name in the Middle Eastern and North African reinsurance market, built upon the company’s excellent reputation and its long-standing relationships with cedants. In addition, the company benefits from its exposure to the Lloyd’s market via its investment in Arig Capital Limited (a corporate member at Lloyd’s). Participation in Lloyd’s syndicates that focus on specialty lines represents just under half of the company’s gross written premium. The majority of Arig’s reinsurance portfolio is written on a treaty basis and is not exposed heavily to natural catastrophes. Additionally, following a shareholder decision, Takaful Re Limited ceased underwriting operations in 2015, and its insurance portfolio has been put into runoff since April 2016. A.M. Best believes this decision will allow Arig to focus its strategy on its core segments and higher margin business lines, such as facultative business, consequently improving underwriting profitability.
Arig’s level of risk-adjusted capitalisation has been assessed as strongest in 2017 on a standard and catastrophe-stressed basis, with capital and surplus growing to USD 257 million at year-end 2016 (2015: USD 244 million). A.M. Best expects Arig’s prospective risk-adjusted capitalisation to remain sufficient to absorb the company’s strategic initiatives. Overall balance sheet strength is supported by modest underwriting leverage, conservative asset allocation resulting in a highly liquid portfolio, and prudent reserving.
Whilst Arig has a history of generating good operating profits, reporting a net profit of USD 10 million in 2016, the company has experienced volatility in underwriting results and reported a technical loss on its Lloyd’s and life insurance segments. These losses were offset by profitable facultative accounts and tightened underwriting controls on core non-life business. The company’s non-life underwriting operations returned a combined ratio of 92.9% in 2016. The company’s expense ratio improved in 2016 owing to a larger premium base, reversal of staff incentives and a shift in product mix. Following the implementation of remediation actions, A.M. Best anticipates Arig’s prospective performance to remain stable and to return to technical and operating profitability across all segments. The company has recorded substantial improvements in operating performance in the first nine months of 2017, delivering a net profit of USD 4.1 million and a non-life combined ratio of 89%.© Press Release 2017
