A.M. Best has affirmed the Financial Strength Rating of B++ (Good) and the Long-Term Issuer Credit Rating of “bbb” of Bankers Assurance S.A.L. (Bankers) (Lebanon). The outlook of these Credit Ratings (ratings) remains stable.
The ratings reflect Bankers’ strong risk-adjusted capitalisation, track record of solid technical performance and good business profile in the Lebanese market. An offsetting rating factor is Bankers’ concentrated exposure to the economic and political risks associated with operating in Lebanon.
Bankers’ risk-adjusted capitalisation has strengthened over 2015 and 2016 and is considered supportive of the ratings. The company’s improved risk-adjusted capitalisation reflects reduced underwriting risk arising from the non-renewal of a number of large group medical contracts written in 2014, alongside good internal capital generation. The company’s balance sheet strength is further supported by a conservative, highly liquid investment portfolio, albeit geographically concentrated in Lebanon. Prospective risk-adjusted capitalisation is expected to remain solid with robust internal capital generation sufficient to support measured strategic initiatives.
Bankers has a track record of solid technical performance, evidenced by a five-year average (2011-2015) combined ratio of 92%. Based on preliminary figures, A.M. Best expects Bankers to realise a non-life combined ratio of around 92% in 2016, in line with historical performance. Non-life technical profits are supplemented by a robust life portfolio, which has consistently returned an underwriting surplus, with a technical margin in excess of 20% for 2015.
Bankers’ good business profile in Lebanon is supported by the company’s established franchise and diversified underwriting portfolio in both the life and non-life business segments. Lebanon’s insurance sector has no clear market leader, and, ranked by gross written premium, Bankers occupied fourth place in the market in 2015, with a market share of approximately 7%. Bankers’ profile is underpinned by its strong position in Lebanon’s non-life market in which the company has ranked second in recent years, with a market share of approximately 9%. Bankers is the principal insurance operation of Nasco Insurance Group Limited (Nasco), a large insurance, reinsurance and insurance related services group operating across Europe and the Middle East.
Bankers’ operations in Lebanon expose the company to heightened levels of economic and political risk. Despite Bankers’ track record of solid operating performance in challenging market conditions, the potential for significant business disruption remains elevated. A.M. Best will continue to monitor developments in Lebanon and assess any impact on the company.
This press release relates to Credit Ratings that have been published on A.M. 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 A.M. Best’s Recent Rating Activity web page. For additional information regarding the use and limitations of Credit Rating opinions, please view Understanding Best’s Credit Ratings.
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