LONDON–(BUSINESS WIRE) –AM Best affirmed the financial strength rating of B + (good) and the issuer’s long-term credit rating (ICR long-term) of “bbb-” of SNIC Insurance BSC (c) (SNIC) (Bahrain). The outlook for these ratings is negative.
The ratings reflect the strength of SNIC’s balance sheet, which AM Best classifies as very strong, as well as its adequate operational performance, limited company profile and marginal corporate risk management.
The negative forecasts reflect the pressures on the company’s risk-adjusted capitalization in recent years, as well as technical losses during this period. AM Best notes that SNIC has taken steps to improve its capital position and technical performance and these pressures have started to ease in 2019. While AM Best expects further improvements in 2020, failure to execute strategic plans is likely to result in negative rating actions.
SNIC’s very strong balance sheet strength assessment is underpinned by its risk-adjusted capitalization which is at the strongest level, as measured by Best’s Capital Adequacy Ratio (BCAR), albeit with a reduced capital buffer in recent years. Compensating rating factors include the company’s high level of reinsurance dependency, although the associated credit risk is mitigated in part by a well-rated reinsurance panel and the concentration of its investment profile in an affiliate company, Wataniya Insurance Company.
The adequate assessment of SNIC’s operating performance reflects its positive, albeit marginal, profit generation, with an average five-year return (2015-2019) of 4.4%. In recent years, SNIC has produced negative technical results, with technical losses of BHD 1.2 million reported between 2017 and 2019. The company has embarked on a strategy to strengthen underwriting yields through restructuring its business model to focus on partnerships with car dealerships and to offer employee benefit solutions. SNIC recorded a modest improvement in its underwriting performance in 2019 and in the first half of 2020.
The SNIC recorded gross written premiums of BHD 10.4 million in 2019, in line with the previous year. The company’s underwriting portfolio remains geographically concentrated in the small and competitive Bahrain market and focused on auto and medical insurance on a gross and net basis.
SNIC is an insurance subsidiary of EA Juffali & Brothers, a family-owned conglomerate operating in Saudi Arabia.
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