Best’s News & Research Service - August 27, 2020 01:01 PM (EDT)
AM Best Affirms Credit Ratings of Bahrain Kuwait Insurance Company B.S.C. and Takaful International Company BSC
- August 27, 2020 01:01 PM (EDT)
London //BestWire// - AM Best has affirmed the Financial Strength Rating of A- (Excellent) and the Long-Term Issuer Credit Ratings of “a-” of Bahrain Kuwait Insurance Company B.S.C. (gig-Bahrain) and its subsidiary, Takaful International Company BSC (gig-Bahrain Takaful), both of which are domiciled in Bahrain. The outlook of these Credit Ratings (ratings) is stable.
The ratings reflect gig-Bahrain’s balance sheet strength, which AM Best categorises as very strong, as well as its strong operating performance, neutral business profile and appropriate enterprise risk management. The ratings also factor in the financial strength of gig-Bahrain’s parent company, Gulf Insurance Group K.S.C.P., due to its strategic importance to the group.
gig-Bahrain Takaful’s ratings consider its strategic importance to gig-Bahrain, with the company providing a platform to underwrite takaful business locally and increasing the overall operations’ market share to approximately 20%, measured by gross written premium. Following its acquisition by gig-Bahrain, gig-Bahrain Takaful has reported improved technical results, with further improvements expected from operational synergies.
gig-Bahrain’s balance sheet strength is underpinned by its risk-adjusted capitalisation that was at the strongest level at year-end 2019, as measured by Best’s Capital Adequacy Ratio (BCAR). gig-Bahrain benefits from a relatively conservative asset allocation and a well-rated reinsurance panel, which mitigates the heightened credit risk associated with the company’s high cessions on commercial risks. AM Best expects gig-Bahrain’s risk-adjusted capitalisation to remain at the strongest level over the medium term.
gig-Bahrain’s longer-term historical underwriting performance has been strong, with combined ratios in the low-80% range; however, there has been a deteriorating trend in underwriting performance in recent years. The group generated a combined ratio of 95.8% in 2019, compared with 92.5% in 2018, driven by one-off expenses relating to value-added tax and a voluntary retirement scheme. The company’s recent underwriting performance also has been impacted by the strengthening of incurred but not reported reserves. AM Best expects prospective underwriting performance to improve following management actions in the motor lines of business, increased retention of profitable business and further synergies with gig-Bahrain Takaful.
gig-Bahrain has a market-leading position in Bahrain’s insurance market and a strong position in Kuwait. The company maintains an excellent domestic franchise, which has been strengthened further following its acquisition of gig-Bahrain Takaful. The company operates in Bahrain and Kuwait, and writes a well-diversified portfolio on a gross premium basis; however, on a net premium basis, its portfolio is concentrated heavily toward motor risks.
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 analytics provider specializing in the insurance industry. Headquartered in the United States, the company does business in over 100 countries with regional offices in New York, London, Amsterdam, Dubai, Hong Kong, Singapore and Mexico City.