AM Best affirms credit ratings of Saudi Arabian Insurance Company

Rating agency AM Best has affirmed the Financial Strength Rating (FSR) of B++ (Good) and the Long-Term Issuer Credit Rating (Long-Term ICR) of bbb+ of Saudi Arabian Insurance Company (Damana) (Bahrain), a statement said.

“The outlook of the FSR remains stable, while the outlook of the long-term ICR remains negative,” the statement noted, adding that “The ratings reflect Damana’s balance sheet strength, which AM Best categorises as very strong, as well as its adequate operating performance, limited business profile and appropriate enterprise risk management”.

AM Best said Damana’s balance sheet strength assessment is underpinned by risk-adjusted capitalisation at the strongest level, as measured by Best’s Capital Adequacy Ratio (BCAR).

“The company’s underwriting leverage is considered to be very low, and capital requirements are driven largely by asset risk arising from the company’s concentrated investment portfolio that is weighted toward affiliated investments and a group treasury account,” it maintained.

However, AM Best added that the negative long-term ICR outlook continues to reflect adverse trends in the company’s operating performance and uncertainty regarding prospective performance.

“Although the company’s historical operating performance has been good, the decline of premium a result of a significant reduction in the international medical portfolio has resulted in considerable expense strain on Damana,” AM Best added.