Best’s News & Research Service - December 09, 2019 02:46 PM (EST)
AM Best Downgrades Credit Ratings of Bankers Assurance S.A.L.; Places Credit Ratings Under Review with Negative Implications
- December 09, 2019 02:46 PM (EST)
London //BestWire// - AM Best has downgraded the Financial Strength Rating to B+ (Good) from B++ (Good) and the Long-Term Issuer Credit Rating to “bbb-” from “bbb” of Bankers Assurance S.A.L. (Bankers) (Lebanon). Concurrently, the Credit Ratings (ratings) have been placed under review with negative implications.
The ratings reflect Bankers’ balance sheet strength, which AM Best categorises as strong, as well as its strong operating performance, limited business profile and appropriate enterprise risk management.
The rating actions reflect the increased social, political and economic instability in Lebanon, which is creating structural market issues that, in AM Best’s opinion, weaken Bankers’ balance sheet strength.
In October 2019, demonstrations spread across Lebanon, rapidly leading to the resignation of the government. Since then, political and economic uncertainty has increased significantly, with a slowdown in capital inflows causing, in some instances, cash flow constraints to the economy.
Whilst Bankers has been able to operate on an ongoing basis since the unrest began, the company has significant exposure to Lebanon, where it sources all of its business and where the large majority of its assets are held. In particular, the company’s investment portfolio is highly concentrated in the domestic banking sector, through corporate bonds and cash and bank deposits. The risk associated with these assets has increased and there are concerns as to how recent events will impact the local banking system.
The ratings have been placed under review as it is difficult to determine how the structural issues in Lebanon will evolve and the extent to which they will impact Bankers’ balance sheet strength, including its liquidity position, as well as how these issues will affect the company’s ability to operate on an ongoing basis. AM Best will monitor how events unfold in Lebanon, and aim to resolve the under review status once there is more clarity as to their impact on Bankers’ credit profile and ability to continue to successfully operate in Lebanon.
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 Understanding 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.