(BUSINESS WIRE)-- A.M. Best Europe – Rating Services Limited has assigned the financial strength rating (FSR) of A (Excellent) and an issuer credit rating (ICR) of “a” to The Mediterranean & Gulf Insurance & Reinsurance Company B.S.C. (c) (Bahrain) (Medgulf Bahrain) and to The Mediterranean & Gulf Cooperative Insurance & Reinsurance Company (S.J.S.C.) (Kingdom of Saudi Arabia) (Medgulf KSA). Concurrently, an FSR of B++ (Good) and an ICR of “bbb+” have been assigned to The Mediterranean & Gulf Insurance & Reinsurance Company S.A.L. (Lebanon) (Medgulf Lebanon). The outlook assigned to all ratings is stable.
The ratings reflect the group’s strong overall business profile, solid risk-adjusted capitalisation and robust operating performance.
Medgulf Bahrain has a strong regional franchise within the Middle East, with leading market positions in Saudi Arabia and Lebanon. In 2012, gross written premiums (GWP) reached SAR 4.1 billion (USD 1.1 billion), mainly driven by medical and motor business lines which accounted for 80% and 10% of GWP respectively. Medgulf Bahrain’s main market is Saudi Arabia, which generated approximately 80% of the group’s premium revenue, with a further 10% from Lebanon. The company also operates in Bahrain, Jordan and the United Kingdom (UK).
Medgulf Bahrain’s risk-adjusted capitalisation improved in 2012, benefiting from a capital injection of SAR 460.6 million (USD 124 million) by the International Finance Corporation (a member of the Word Bank Group), which acquired 14% of the group’s equity. The group’s prospective capital position is expected to remain supportive of the rating level, with good earnings retention expected to absorb projected growth over the next two years.
Medgulf Bahrain exhibits robust operating profitability with a five year average combined ratio below 90%. The company recorded a technical profit of SAR 116.5 million (USD 31.1 million) in 2012, while investment income remained modest at SAR 31.9 million (USD 8.5 million). The group’s earnings are expected to remain resilient in the next few years, mainly driven by underwriting performance.
Upward rating movement for Medgulf Bahrain is unlikely in the near term.
Downward rating pressure could occur if there were a prolonged deterioration in Medgulf Bahrain’s operating performance and /or its risk-adjusted capitalisation were to decrease to a level not supportive of the current ratings.
The ratings of Medgulf KSA and Medgulf Lebanon receive rating enhancement from Medgulf Bahrain, given their strategic importance to the group.
Upwards and downwards rating movement of Medgulf Bahrain’s key subsidiaries would result from a change in the stand-alone assessment, or a revision of the rating enhancement of the respective subsidiary.
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
Ghislain Le Cam, CFA
Senior Financial Analyst, Analytics
+(44) 20 7397 0268
ghislain.lecam@ambest.com
Mahesh Mistry
Director, Analytics
+(44) 20 7397 0325
mahesh.mistry@ambest.com
Rachelle Morrow
Senior Manager, Public Relations
+(1) 908 439 2200, ext. 5378
rachelle.morrow@ambest.com
Jim Peavy
Assistant Vice President, Public Relations
+(1) 908 439 2200, ext. 5644
james.peavy@ambest.com
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