A.M. Best Removes From Under Review With Developing Implications and Affirms Credit Ratings of Bahrain Kuwait Insurance Company B.S.C.
In
The rating actions follow the close of the mandatory offer period, and the completion of A.M. Best’s review of the ongoing integration plans and the financial position of BKIC. Following the completion of the mandatory offer period, BKIC acquired an additional 3.6% of TIC, increasing its ownership share to 67.3%. TIC is classified as a subsidiary of BKIC and has been fully consolidated into the company’s financial statements as of 30
BKIC has historically maintained a strong level of risk-adjusted capitalisation, benefitting from a conservative investment strategy and a low level of underwriting leverage. The transaction was funded fully through internal resources, and therefore did not result in additional financial leverage. Given the increase in underwriting and investment risks resulting from the transaction, BKIC’s consolidated risk-adjusted capitalisation is diminished, although it remains supportive of the ratings.
BKIC has a track record of excellent operating performance, driven by strong underwriting performance, as demonstrated by a five-year (2012 - 2016) average combined ratio of 78%. TIC’s technical profitability has not been as strong, and prospective performance will be dependent on BKIC’s ability to introduce its underwriting philosophy to the subsidiary and the level of expense synergies that can be achieved. During the first half of 2017, BKIC reported a combined ratio of 95% compared with 71% in the same period in 2016. Whilst prospective underwriting performance may deteriorate on a consolidated basis,
BKIC maintains an excellent domestic franchise in
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. For information on the proper media use of Best’s Credit Ratings and
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