AM Best has revised the outlooks to stable from negative and affirmed the Financial Strength Rating of B+ (Good) and Long-Term Issuer Credit Rating of “bbb-” (Good) of SNIC Insurance B.S.C. (c) (SNIC) (
These Credit Ratings (ratings) reflect SNIC’s balance sheet strength, which AM Best assesses as very strong, as well as its adequate operating performance, limited business profile and marginal enterprise risk management.
The revision of the outlooks reflects the expectation that SNIC’s balance sheet strength will remain very strong, supported by risk-adjusted capitalisation above the assessed level of very strong, as measured by Best’s Capital Adequacy Ratio (BCAR). It is expected to remain at or above the very strong BCAR level. This revision also considers SNIC’s future operating performance, which is expected to continue benefiting from successful execution of its strategic plan.
SNIC’s balance sheet strength assessment of very strong is underpinned by its risk-adjusted capitalisation level, albeit extremely volatile given its significant investment stake in Wataniya Insurance Company, an affiliated publicly listed company, which had market value greater than 120% of SNIC’s equity at year-end 2020. Offsetting rating factors include the company’s reduced capital buffer in recent years and its continued high level of reinsurance dependence, although the associated credit risk is mitigated partly by a well-rated reinsurance panel.
SNIC’s adequate operating performance assessment reflects its positive earnings generation, with an average five-year (2016-2020) return on equity of 6.2%. In 2020, SNIC achieved a small underwriting profit following three years of technical losses 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 reported gross written premiums of
SNIC is an insurance subsidiary of E.A. Juffali & Brothers, a family-owned conglomerate operating in
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Source: AM Best