A.M. Best Affirms Ratings of Solidarity General Takaful BSC (c)

LONDON--(BUSINESS WIRE)-- A.M. Best has affirmed the financial strength rating of B++ (Good) and the issuer credit rating of “bbb” of Solidarity General Takaful BSC (c) (SGT) (Bahrain). The outlook for both ratings is stable.

The ratings of SGT reflect its adequate level of risk-adjusted capitalisation and niche market profile as a takaful operator in Bahrain. The ratings benefit from the financial strength of SGT’s parent company, Solidarity Group Holding BSC (c) (SGH), and reflect SGT’s strategic importance to the group. An offsetting rating factor is SGT’s marginal underwriting performance.

Risk-adjusted capitalisation is measured on a combined basis (integrating both shareholders’ and policyholders’ funds) given the strength of regulation in Bahrain and the protection provided to policyholders. SGT’s risk-adjusted capitalisation remains at a sound level and is sufficient to support the company’s strategic initiatives. At year-end 2014, the company’s capital and surplus reached USD 23.2 million; however, its policyholders’ fund deficit amounted to USD 7.0 million.

SGT has an estimated 8% share of Bahrain’s insurance market and is the second largest provider in the fast-growing local takaful sector.

The company’s underwriting performance improved in 2014 compared with 2013, but remains marginal due to the level of claims from its key lines of motor and medical. Whilst SGT has taken a number of initiatives to improve technical profitability, including greater actuarial involvement in the pricing and monitoring of medical accounts, this remains a challenge in Bahrain’s competitive insurance market. As a result, SGT has been reliant on steady investment income to remain profitable.

Positive rating movement could result from a sustained improvement in underwriting performance of the SGH group coupled with an enhanced market franchise. Negative rating movement could result from a material decline in the company’s risk-adjusted capitalisation, a deterioration in SGH’s credit fundamentals or a reassessment of the level of support provided by SGH.

The methodology used in determining these ratings is Best’s Credit Rating Methodology, which provides a comprehensive explanation of A.M. Best’s rating process and contains the different rating criteria employed in the rating process. Best’s Credit Rating Methodology can be found at www.ambest.com/ratings/methodology.

Key insurance criteria reports utilised:

• Catastrophe Analysis in A.M. Best Ratings
• Rating Members of Insurance Groups
• Takaful (Shari'a Compliant) Insurance Companies
• Evaluating Country Risk
• Risk Management and the Rating Process for Insurance Companies
• Understanding Universal BCAR

In accordance with Regulation (EC) No. 1060/2009, the following is a link to required disclosures: A.M. Best Europe - Rating Services Limited Supplementary Disclosure.

This press release relates to rating(s) 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 visit A.M. Best’s Ratings & Criteria Center.

A.M. Best Company is the world's oldest and most authoritative insurance rating and information source. For more information, visit www.ambest.com.

Copyright © 2015 by A.M. Best Company, Inc. ALL RIGHTS RESERVED.

View source version on businesswire.com: http://www.businesswire.com/news/home/20150611005894/en/

A.M. Best Company, Inc.
Michael Dunckley, +(44) 20 7397 0321
Financial Analyst
[email protected]
or
Ghislain Le Cam, CFA, +(44) 20 7397 0268
Associate Director, Analytics
[email protected]
or
Christopher Sharkey, +(1) 908 439 2200, ext. 5159
Manager, Public Relations
[email protected]
or
Jim Peavy, +(1) 908 439 2200, ext. 5644
Assistant Vice President, Public Relations
[email protected]

Source: A.M. Best Company, Inc.

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