JANUARY 09, 2020 09:35 AM (EST)

AM Best Upgrades Issuer Credit Rating of Solidarity Bahrain B.S.C.

 Luca Patron
Financial Analyst
+44 20 7397 0304

Ghislain Le Cam, CFA, FRM
Director, Analytics
+44 20 7397 0268

Christopher Sharkey
Manager, Public Relations
+1 908 439 2200, ext. 5159

Jim Peavy
Director, Public Relations
+1 908 439 2200, ext. 5644


LONDON - JANUARY 09, 2020 09:35 AM (EST)
AM Best has upgraded the Long-Term Issuer Credit Rating (Long-Term ICR) to “bbb+” from “bbb” and affirmed the Financial Strength Rating (FSR) of B++ (Good) of Solidarity Bahrain B.S.C. (Solidarity Bahrain) (Bahrain). The outlook of the Long-Term ICR has been revised to stable from positive, while the outlook of the FSR remains stable.

The Credit Ratings (ratings) reflect Solidarity Bahrain’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. In addition, the ratings consider, in the form of lift, Solidarity Bahrain’s strategic importance to its parent company, Solidarity Group Holding BSC (c) (SGH), a leading provider of Islamic insurance solutions in Bahrain and Jordan. The Long-Term ICR upgrade reflects the improvement in the business profile of SGH, achieved through a stronger competitive position in Bahrain, following the integration of Al Ahlia Insurance Company B.S.C. (AAIC), acquired in 2016.

Solidarity Bahrain’s balance sheet strength is underpinned by its risk-adjusted capitalisation at the strongest level, as measured by Best’s Capital Adequacy Ratio (BCAR), its good liquidity, and its financial flexibility, with access to the debt and the equity markets. Offsetting factors are the company’s high reinsurance dependence and elevated asset risk due to the concentration of its investments in Bahrain and the Gulf Corporation Council.

AM Best expects Solidarity Bahrain’s operating performance to remain adequate over the underwriting cycle, supported by positive technical earnings and moderate investment income. The company reported a healthy return on equity (ROE) of 10% in 2018, supported by corrective actions taken by management to improve the profitability of AAIC’s legacy operations. AM Best expects Solidarity Bahrain’s ROE to improve moderately in the medium term, driven by a continued focus on technical discipline.

Solidarity Bahrain was formed following the merger between AAIC and Solidarity General Takaful BSC (c) in 2017, which created a leading insurer in Bahrain’s insurance market, with BD 30 million of gross written contribution in 2018. Nonetheless, Solidarity Bahrain’s business profile is limited by its concentration in Bahrain’s insurance market, which is relatively small and highly competitive.

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 Guide to 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.

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