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FOR IMMEDIATE RELEASE
SINGAPORE - DECEMBER 15, 2016 12:17 PM (EST)
A.M. Best has revised the Long-Term Issuer Credit Rating (Long-Term ICR) outlook to negative from stable and affirmed the Financial Strength Rating (FSR) of B++ (Good) and the Long-Term ICRs of “bbb+” of ACR ReTakaful MEA B.S.C. (c) (ACR ReTakaful MEA) (Bahrain) and ACR ReTakaful Berhad (ACR ReTakaful Bhd) (Malaysia). The outlook of the FSR remains stable. A.M. Best also has revised the Long-Term ICR outlook to negative from stable and affirmed the Long-Term ICR of “bb+” of ACR ReTakaful Holdings Limited (ACR ReTakaful Holdings) (United Arab Emirates).
The rating actions taken on the two operating companies consider further deterioration to their business profiles. Each company’s projected gross premium levels year to date for 2016 are materially below prior-year projections, reflecting material weakening in their business profiles. The significant Qard Hassan write-offs in ACR ReTakaful MEA’s and ACR ReTakaful Bhd’s shareholder funds reflect a lack of confidence in these companies’ ability to build commercially viable underwriting portfolios.
At a consolidated level, ACR ReTakaful MEA’s and ACR ReTakaful Bhd’s risk-adjusted capitalization, as measured by Best’s Capital Adequacy Ratio (BCAR), remain adequate and supportive of the ratings. Given the material decline in the two companies’ business profiles, there is uncertainty about the amount of capital buffer that will be maintained. However, extraction of excess capital is expected to be subject to regulatory approval.
The rating actions taken on ACR ReTakaful Holdings consider the standard notching of the holding company’s ratings from its major operating insurance entities.
Upward rating movement is not expected. Capital reduction as a result of shareholder fund capital repatriation would result in negative rating pressure.
Ratings are communicated to rated entities prior to publication. Unless stated otherwise, the ratings were not amended subsequent to that communication.
This press release relates to Credit Ratings 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 see A.M. Best’s Recent Rating Activity web page. For additional information regarding the use and limitations of Credit Rating opinions, please view Understanding Best’s Credit Ratings.
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