London, December 7, 2023–(Business Wire)–AM best has affirmed Solidarity Bahrain BSC (Solidarity Bahrain) (Bahrain)’s financial strength rating of B++ (good) and long-term issuer credit rating of ‘bbb+’ (good). The outlook for these credit ratings (ratings) is stable.
This rating reflects Solidarity Bahrain’s balance sheet strength, which AM Best considers to be very strong, as well as its adequate operating performance, limited business profile, and appropriate corporate risk management. The rating also takes into account the strategic importance of Solidarity Bahrain in the form of lift to its parent company, Solidarity Group Holding BSC (c) (SGH), a leading provider of Islamic insurance solutions in Bahrain and Jordan. .
Solidarity Bahrain’s balance sheet strength is underpinned by the strongest level of total risk-adjusted capital as measured by the Best Capital Adequacy Ratio (BCAR). AM Best evaluates the company’s total risk-adjusted capital, including policyholder funds and shareholder funds, on a combined basis due to the strength of domestic regulations and the need for shareholder funds to support policyholder funds. AM Best expects the company’s expected total risk-adjusted capital to be the minimum required for the strongest rating following the acquisition and merger of Al Hilal Life BSC(c) (Al Hilal), which is scheduled to close by the end of 2023. We expect it to remain at a level that is comfortably above it. Solidarity Bahrain’s balance sheet strength benefits from good liquidity and financial flexibility. Partially offsetting these positive factors is the company’s reliance on third-party reinsurance and its asset concentration in Bahrain and the GCC, leading to Solidarity Bahrain There may be changes in the company’s capital base.
The company has a track record of achieving adequate operating margins supported by good technology returns, as evidenced by a five-year (2018-2022) weighted average combined ratio of 94.8% and moderate investment returns. Masu. In 2022, Solidarity Bahrain reported a combined ratio of 94.1% (2021: 91.3%); This was partly due to the integration of The company is expected to continue to deliver adequate performance over the medium term as it continues to grow and integrate Al Hilal with a focus on technological discipline.
Solidarity Bahrain is Bahrain’s leading insurance company with total contributions amounting to BHD 46.2 million (US$ 123.4 million) in 2022. The merger with Al Hilal is expected to strengthen Solidarity Bahrain’s position in the domestic market and strengthen its product diversification through the extension of insurance terms. Fragment and moderate geographic diversification through Al Hilal’s Kuwait operations. However, Solidarity Bahrain’s concentration in Bahrain’s highly competitive small insurance market remains an offsetting factor in its business profile assessment.
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