A.M. Best Upgrades Issuer Credit Rating of Arab Insurance Group (B.S.C.); Affirms Financial Strength Rating
A.M. Best Co. has upgraded the issuer credit rating to “bbb+” from “bbb” and affirmed the financial strength rating of B++ (Good) of Arab Insurance Group (B.S.C.) (ARIG) (Bahrain). The outlook for both ratings is stable.
The rating upgrade reflects ARIG’s improving technical performance, in comparison with the marginal historical technical results of recent years. Additional factors are the company’s strong business profile and risk-adjusted capitalisation as well as its sophisticated risk management.
In A.M. Best’s view, ARIG is progressively strengthening its reinsurance portfolio, discontinuing the unprofitable non-life business and improving its awareness and control over its long-term life business, which, going forward, is planned to be managed through a separate fund evaluated on an embedded value basis.
A.M. Best believes that the non-life combined ratio is likely to remain below 100% in 2009. A.M. Best acknowledges that ARIG’s pruning of bad business is a gradual process, also in consideration that bouquet placements are the preferred arrangement for proportional treaties in ARIG’s main market.
In A.M. Best’s opinion, ARIG is steadily enhancing its level of diversification by lines of business and geographic markets and increasing its presence in Africa and the Far East, while still preserving its recognized position in the Middle East, which remains the company’s core market.
A.M. Best sees ARIG’s risk-adjusted capitalisation as strong, supportive of its ratings and proven to be resilient to the recent financial markets crisis. The company continues to develop its enterprise risk management framework, comprising the dynamic financial analysis model devised in 2007.
In terms of investment and underwriting exposure, ARIG is not exposed to Dubai World group entities’ debt, although it does have some property and engineering accounts related to Dubai World group.
For Best’s Credit Ratings, an overview of the rating process and rating methodologies, please visit http://www.ambest.com/ratings.
The principal methodologies used in determining these ratings, including any additional methodologies and factors that may have been considered, can be found at http://www.ambest.com/ratings/methodology.
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