A.M. Best Assigns Ratings to Saudi Arabian Insurance Company B.S.C. (C)

LONDON--(BUSINESS WIRE)-- A.M. Best has assigned a financial strength rating of A- (Excellent) and an issuer credit rating of “a-” to Saudi Arabian Insurance Company B.S.C. (C) (Damana) (Bahrain). The outlook assigned to both ratings is stable.

The ratings reflect the company’s strong business profile, excellent risk-adjusted capitalisation and track record of robust operating performance. Offsetting rating factors are the company’s low, but improving, level of premium retention and high investment concentration within the group.

Damana has a strong regional franchise in the Middle East, with an established presence in Bahrain, the United Arab Emirates, Oman and Kuwait. The company also has a broader profile, via its affiliates and sister companies, in Saudi Arabia, Yemen and Lebanon. Whilst benefiting from regional diversification, the company is heavily concentrated in the medical division, particularly business sourced through its strategic relationship with Cigna Corporation (Cigna) (United States). Damana has a relatively low overall premium retention level of 16.8%, driven by the company taking a relatively small share of its Cigna-related business. Over the next few years, premium retention is expected to increase as Damana assumes higher retention on this business. Unaudited figures for the first quarter of 2015 show evidence of this strategy, with a sharp increase in premium retention.

Damana maintains excellent risk-adjusted capitalisation, benefitting from low underwriting leverage and a strong reinsurance panel to support the high outward reinsurance cessations. Capital requirements are largely driven by Damana’s investment profile, which includes a group treasury account. The group treasury account generates a good guaranteed rate of return and is deposited with Damana’s ultimate parent, Mawarid Holding Company (Mawarid Group) (Saudi Arabia). However Damana has limited control or oversight over the investments supporting the deposit. A.M. Best notes that despite the significant concentration in the group treasury account, the company does maintain a sufficient level of liquidity. Damana’s capitalisation is expected to remain strong through good internal capital generation and by maintaining a sufficient buffer for strategic initiatives over the next few years.

Damana has demonstrated robust underwriting profitability in recent years, producing solid combined ratios below 85%, whilst growing premium revenue at an average of 34% over the past five years. The strong underwriting is supported by good investment yields, which have averaged approximately 10.3% over the past five years. Going forward, the company’s underwriting performance is expected to remain stable with investment income continuing to augment underwriting profits.

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/20150716006137/en/

A.M. Best
Salman Siddiqui, ACA
Senior Financial Analyst
+(44) 20 7397 0311
[email protected]
or
Mahesh Mistry
Director, Analytics
+(44) 20 7397 0325
[email protected]
or
Christopher Sharkey
Manager, Public Relations
+(1) 908 439 2200, ext. 5159
[email protected]
or
Jim Peavy
Assistant Vice President, Public Relations
+(1) 908 439 2200, ext. 5644
[email protected]

Source: A.M. Best

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