OCTOBER 15, 2021 12:15 PM (EDT)
AM Best Revises Outlooks to Stable for SNIC Insurance B.S.C. (c)
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Michael Dunckley, CFA
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Manager, Public Relations
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FOR IMMEDIATE RELEASE
LONDON - OCTOBER 15, 2021 12:15 PM (EDT)
AM Best has revised the outlooks to stable from negative and 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).
These Credit Ratings (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.
The revision of the outlooks reflects the expectation that SNIC’s balance sheet strength will remain very strong, supported by risk-adjusted capitalisation above the assessed level of very strong, as measured by Best’s Capital Adequacy Ratio (BCAR). It is expected to remain at or above the very strong BCAR level. This revision also considers SNIC’s future operating performance, which is expected to continue benefiting from successful execution of its strategic plan.
SNIC’s balance sheet strength assessment of very strong is underpinned by its risk-adjusted capitalisation level, albeit extremely volatile given its significant investment stake in Wataniya Insurance Company, an affiliated publicly listed company, which had market value greater than 120% of SNIC’s equity at year-end 2020. Offsetting rating factors include the company’s reduced capital buffer in recent years and its continued high level of reinsurance dependence, although the associated credit risk is mitigated partly by a well-rated reinsurance panel.
SNIC’s adequate operating performance assessment reflects its positive earnings generation, with an average five-year (2016-2020) return on equity of 6.2%. In 2020, SNIC achieved a small underwriting profit following three years of technical losses between 2017 and 2019. The company has embarked on a strategy to strengthen underwriting returns through restructuring its business model to focus on partnerships with motor dealerships and to offer employee benefit solutions.
SNIC reported gross written premiums of BHD 9.9 million in 2020, in line with the prior year. The company’s limited business profile reflects SNIC’s underwriting portfolio, which remains geographically concentrated in Bahrain’s competitive and small market and its focus on motor and medical insurance.
SNIC is an insurance subsidiary of E.A. Juffali & Brothers, a family-owned conglomerate operating in Saudi Arabia, for which SNIC receives no credit enhancement.
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 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.