AM Best has affirmed the Financial Strength Rating of B+ (Good) and the Long-Term Issuer Credit Rating (Long-Term ICR) of "bbb-" of SNIC Insurance B.S.C. (c) (SNIC) (Bahrain). The outlook of these Credit Ratings (ratings) is negative.
The ratings reflect SNIC’s balance sheet strength, which AM Best categorises as very strong, as well as its adequate operating performance, limited business profile and marginal enterprise risk management.
The negative outlooks reflect pressures on the company’s risk-adjusted capitalisation in recent years, as well as technical losses over this period. AM Best notes that SNIC has undertaken initiatives to improve its capital position and technical performance, and these pressures began to ease in 2019. While AM Best expects further improvement over 2020, failure to execute strategic plans successfully is likely to result in negative rating actions.
SNIC’s balance sheet strength assessment of very strong is underpinned by its risk-adjusted capitalisation being at the strongest level, as measured by Best’s Capital Adequacy Ratio (BCAR), albeit with a reduced capital buffer in recent years. Offsetting rating factors include the company’s high level of reinsurance dependence, although the associated credit risk is mitigated partly by a well-rated reinsurance panel, and the concentration of its investment profile in an affiliated company, Wataniya Insurance Company.
SNIC’s adequate operating performance assessment reflects its positive, albeit marginal, earnings generation, with an average five-year return on equity (2015-2019) of 4.4%. In recent years, SNIC has delivered negative technical results, with technical losses of BHD 1.2 million reported 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 has reported a modest improvement in its underwriting performance in 2019 and the first-half of 2020.
SNIC reported gross written premiums of BHD 10.4 million in 2019, in line with the prior year. The company’s underwriting portfolio remains geographically concentrated in Bahrain’s competitive and small market and focused on motor and medical insurance on a gross and net basis.
SNIC is an insurance subsidiary of E.A. Juffali & Brothers, a family-owned conglomerate operating in Saudi Arabia.
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