(BUSINESS WIRE)-- A.M. Best Europe – Rating Services Limited has affirmed the financial strength rating of B++ (Good) and issuer credit rating of “bbb+” of Trade Union Cooperative Insurance Company – A Saudi Joint Stock Company (TUCI) (Saudi Arabia). The outlook for both ratings remains stable.
The ratings reflect TUCI’s robust risk-adjusted capitalisation and resilient overall earnings. An offsetting rating factor is the execution risks associated with the company’s ambitious growth plans.
Despite volatile market conditions, TUCI grew its gross premium revenue by 30% in the first nine months of 2013 and generated strong overall earnings for the period. High growth is expected for the remainder of 2013 and over the medium term, principally driven by an exclusive agreement with a motor dealership to provide extended warranty motor insurance across Saudi Arabia.
While over the longer term the successful execution of TUCI’s strategic plans is anticipated to generate positive rating pressure, over the shorter term there are execution risks surrounding the rapid expansion of a new business line. TUCI’s risk-adjusted capitalisation is likely to remain adequate for its rating in future years and is expected to be supported by high profit retention. Lower than anticipated earnings could result in a weakening of risk-adjusted capitalisation.
Upward rating movement could arise if TUCI demonstrates stable profitability and strong risk-adjusted capitalisation while growing its franchise. Downwards rating pressure could arise through a significant reduction in risk-adjusted capitalisation or a prolonged deterioration in profitability.
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.
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.
A.M. Best Europe – Rating Services Limited is a subsidiary of A.M. Best Company. 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 © 2013 by A.M. Best Company, Inc. ALL RIGHTS RESERVED.
Contacts
A.M. Best Co.
Tim Prince, +(44) 20 7397 0320
Senior Financial Analyst
timothy.prince@ambest.com
Mahesh Mistry, +(44) 20 7397 0325
Director
mahesh.mistry@ambest.com
Rachelle Morrow, +1 908-439-2200, ext. 5378
Senior Manager, Public Relations
rachelle.morrow@ambest.com
Jim Peavy, +1 908-439-2200, ext. 5644
Assistant Vice President, Public Relations
james.peavy@ambest.com
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