Best’s News & Research Service - November 03, 2022 09:36 AM (EDT)
AM Best Affirms Credit Ratings of SNIC Insurance B.S.C. (c)
- November 03, 2022 09:36 AM (EDT)
London //BestWire// - AM Best has affirmed the Financial Strength Rating of B+ (Good) and Long-Term Issuer Credit Rating of “bbb-” (Good) of SNIC Insurance B.S.C. (c) (SNIC) (Bahrain). The outlook of these Credit Ratings (ratings) is stable.
The ratings reflect SNIC’s balance sheet strength, which AM Best assesses as very strong, as well as its adequate operating performance, limited business profile and marginal enterprise risk management.
SNIC’s balance sheet strength is underpinned by risk-adjusted capitalisation that strengthened to reach the strongest level at year-end 2021, as measured by Best’s Capital Adequacy Ratio (BCAR). The company’s risk-adjusted capitalisation has been volatile in recent years, driven by changes in the value of its significant investment stake in Wataniya Insurance Company (Wataniya), an affiliated publicly listed company. AM Best expects SNIC’s BCAR scores to strengthen further prospectively, as the company plans to reduce its holding in Wataniya, following an initial partial disposal completed in the third quarter of 2022. Such reduction in investment risk is expected to contribute to lower volatility in risk-adjusted capitalisation going forward.
SNIC’s adequate operating performance assessment reflects its positive earnings generation, with a five-year (2017-2021) weighted average return-on-equity ratio of 3.8%. In 2021, SNIC achieved a small underwriting profit, which translated into a combined ratio of 99.3% (as calculated by AM Best), unchanged compared to 2020. In 2021, SNIC marked the second consecutive year of achieving a combined ratio below 100%, following underwriting losses in prior years. In line with its strategy, the company plans to improve its underwriting returns, notably by focusing on partnerships with motor dealerships, and offering employee benefit solutions. However, AM Best notes that execution risk remains as a challenge to SNIC achieving consistent underwriting profitability, with its loss ratio having increased notably over the first half of 2022 following growth in its motor book of business. In response, SNIC has launched performance remediation actions.
SNIC reported gross written premium of BHD 12.7 million (USD 34.1 million) in 2021, demonstrating approximately 30% growth compared with the previous year. The limited business profile assessment reflects SNIC’s concentration, as the company solely operates in the highly competitive and relatively small Bahraini market, where it focuses on motor and medical insurance.
SNIC is an insurance subsidiary of E.A. Juffali & Brothers, a family-owned conglomerate operating in Saudi Arabia. SNIC receives no rating enhancement or drag from this affiliation.
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.