ENP Newswire - 23 June 2014
Release date- 20062014 - A.M. Best has assigned a financial strength rating of B++ (Good) and an issuer credit rating of 'bbb' to Solidarity General Takaful BSC (SGT) (Bahrain).
The outlook assigned to both ratings is stable.
The ratings of SGT reflect its sound level of risk-adjusted capitalisation and niche market profile as a takaful operator in Bahrain. The ratings benefit from the financial strength of its parent company; Solidarity Group Holding BSC (SGH), given SGT's strategic importance to the group. An offsetting factor is the company's marginal underwriting performance.
Risk-adjusted capitalisation is measured on a combined basis (integrating both shareholders' and policyholders' funds) given the strength of regulation in Bahrain and the protection provided to policyholders. SGT's risk-adjusted capitalisation remains at a sound level and is sufficient to support the company's strategic initiatives. At year-end 2013, the company's capital and surplus reached USD 21.9 million; however its policyholder deficit amounted to USD 6.9 million.
SGT has an 8% share of the Bahraini insurance market and is the second largest provider in the fast-growing local takaful sector.
The company's underwriting performance produced deficits in 2012 and 2013, with its key business lines of motor and medical underperforming. While the company reduced its medical losses in 2013, this was offset by higher combined ratios in its property and general accident books. As a result, SGT has been reliant on steady investment income to remain profitable.
Positive rating movement could result from a sustained improvement in underwriting performance, coupled with an enhanced market franchise. Negative rating movement could result from a material decline in the company's risk-adjusted capitalisation or a re-assessment of the level of support provided by SGH.
The methodology used in determining these ratings is Best's Credit Rating Methodology, which provides a comprehensive explanation of A.M. Best's rating process and contains the different rating criteria employed in the rating process. Best's Credit Rating Methodology can be found at www.ambest.com/ratings/methodology.
In accordance with Regulation (EC) No. 1060/2009, the following is a link to required disclosures:A.M. Best Europe - Rating Services Limited Supplementary Disclosure.
This rating announcement has been issued by A.M. Best Europe - Rating Services Limited, which is a subsidiary of A.M. Best Company. A.M. Best Company is the world's oldest and most authoritative insurance rating and information source.
A.M. Best's credit ratings are independent and objective opinions, not statements of fact. A.M. Best is not an Investment Advisor, does not offer investment advice of any kind, nor does the company or its Ratings Analysts offer any form of structuring or financial advice. A.M. Best's credit opinions are not recommendations to buy, sell or hold securities, or to make any other investment decisions.
A.M. Best receives compensation for its rating services from the organizations that it rates, unless such ratings are identified with a Public Data modifier ('pd'). Public Data ratings are based on information available in the public domain and indicate the more limited scope of the rating and the fact that the company did not initiate the rating. A.M. Best does not send entities assigned a 'pd' rating an invoice for its rating services and does not assign ratings to securities issued by companies assigned a Best's 'pd' rating. A.M. Best may also receive compensation from rated entities for non-rating related services or products offered by A.M. Best. A.M. Best does not offer consulting or advisory services. For more information regarding A.M. Best's rating process, including handling of confidential (non-public) information, independence, and avoidance of conflicts of interest, please read the A.M. Best Code of Conduct.
A.M. Best Company and its subsidiaries are not registered as External Credit Assessment Institutions (ECAI) in the European Union (EU). Credit ratings issued by A.M. Best Company and its subsidiaries can not be used for regulatory purposes in the EU as per Directive 2006/48/EC.