Best’s News & Research Service - July 16, 2015 09:32 AM (EDT)
A.M. Best Comments on Ratings of Saudi United Cooperative Insurance Company (Wala'a)
- July 16, 2015 09:32 AM (EDT)
London //BestWire// - A.M. Best has commented that the financial strength rating of B++ (Good) and the issuer credit rating of "bbb" of Saudi United Cooperative Insurance Company (Wala'a) (Saudi Arabia) remain unchanged following the successful completion of the company's SAR 240 million (USD 64 million) rights issue.
The rights issue, which was completed in June 2015, bolstered the company's capital position, doubling shareholders' paid-up capital from SAR 200 million (USD 53 million) to SAR 400 million (USD 106 million). In addition, the company received SAR40 million (USD 11 million) in share premium. A.M. Best notes that Wala'a is the only insurance company to receive a premium for its shares amongst the recent rights issues by various Saudi Arabian insurance companies. Proceeds from the rights issue are expected to support increasing levels of underwriting activity and higher premium retention. The rights issue improves the company's risk-adjusted capitalisation, which was previously under pressure. Wala'a's capitalisation is projected to remain strong through good internal capital generation and by maintaining a sufficient buffer for strategic initiatives over the next few years.
The company produced an overall loss (after zakat) of SAR 3.7 million (USD 1 million) in 2014 compared with a profit (after zakat) of SAR 21.7 million (USD 5.8 million) in 2013. The poor result was driven by a significantly larger zakat charge and higher underwriting losses from the company's motor line of business.
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