Best’s News & Research Service - December 07, 2022 12:32 PM (EST)
AM Best Assigns Credit Ratings to Arab War Risks Insurance Syndicate
- December 07, 2022 12:32 PM (EST)
London //BestWire// - AM Best has assigned a Financial Strength Rating of B++ (Good) and a Long-Term Issuer Credit Rating of “bbb+” (Good) to Arab War Risks Insurance Syndicate (AWRIS) (Bahrain). The outlook assigned to these Credit Ratings (ratings) is stable.
The ratings reflect AWRIS’ balance sheet strength, which AM Best assesses as very strong, as well as its strong operating performance, limited business profile and appropriate enterprise risk management.
AWRIS’s balance sheet strength is underpinned by its risk-adjusted capitalisation, as measured by Best’s Capital Adequacy Ratio (BCAR), comfortably in excess of the threshold required for a strongest assessment. Balance sheet strength benefits from a relatively conservative investment strategy and low net underwriting leverage. Additionally, reserving practices are considered prudent, albeit somewhat unsophisticated. AM Best considers AWRIS to have a very high dependence on retrocession in order to provide capacity to members and to manage potential volatility from large losses. Risk associated with this dependance and ability to renew the programme is mitigated partly by the syndicate’s track record of profitable underwriting and its limited dependence on any single retrocession partner. Given the nature of AWRIS’ operations and membership structure as a syndicate of (re)insurance companies in the Middle East and North Africa (MENA) region, risks associated with the permanence of capital is a further offsetting factor.
AWRIS has a track record of strong operating performance, demonstrated by a 10-year (2012-2021) weighted average combined ratio of 62.0% and a 10-year return-on-equity ratio (ROE) of 10.5%. AWRIS’ underwriting performance has been supported by low loss ratios, demonstrated by a 10-year weighted average loss ratio of 2.4%. ROE metrics are considered supportive of the strong operating performance assessment given AWRIS’ high level of capitalisation, which depresses ROE.
AWRIS has an established position as a niche underwriter of marine war risks across the MENA region for its members. As a niche operator, concentration by line of business is viewed as an offsetting factor. This is offset partially by good geographic diversification within the region. There is limited dependence on any single member with regard to premium income, and the syndicate has seen generally stable membership composition. Nevertheless, there remains a reliance on continued membership participation.
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 use of Best’s Credit Ratings, Best’s Performance Assessments, Best’s Preliminary Credit Assessments and AM Best press releases, please view Guide to Proper Use of Best’s Ratings & Assessments.
AM Best is a global credit rating agency, news publisher and data analytics provider specialising in the insurance industry. Headquartered in the United States, the company does business in over 100 countries with regional offices in London, Amsterdam, Dubai, Hong Kong, Singapore and Mexico City.