AM Best Affirms Credit Ratings of SNIC Insurance B.S.C. (c)

AM Best has affirmed the Financial Strength Rating of B+ (Good) and the Long-Term Issuer Credit Rating of “bbb-” (Good) of SNIC Insurance B.S.C. (c) (SNIC) (Bahrain). The outlook of these Credit Ratings (ratings) is negative.

The ratings reflect SNIC’s balance sheet strength, which AM Best assesses as very strong, as well as its adequate operating performance, limited business profile and marginal enterprise risk management.

SNIC’s balance sheet strength is underpinned by its risk-adjusted capitalisation at the strongest level at year-end 2023, as measured by Best’s Capital Adequacy Ratio (BCAR). AM Best expects SNIC’s BCAR to remain at the strongest level, supported by reduced volatility after the company scaled down its holding in Wataniya Insurance Company, an affiliated publicly listed company in early 2023. The balance sheet strength assessment also considers the company’s relatively conservative investment portfolio, with the majority of investments held in the United States, and its strong liquidity position.

SNIC’s operating performance has weakened in recent years, largely due to volatility in investment results coupled with poor technical returns. Despite achieving a solid overall profit of BHD 4.9 million (USD 13.0 million) in 2023, SNIC reported a negative insurance service result of BHD 579,000 (USD 1.5 million), which translated into a net-gross combined ratio (as calculated by AM Best) of 113.1%, a decline when compared with the prior year (108.2%). AM Best notes that performance in 2024 to date has seen some improvement in technical profitability; however, tough market conditions and execution risk remain a challenge to SNIC in achieving sustainable improvements in underwriting results.

SNIC reported insurance service revenue of BHD 12.8 million (USD 33.9 million) in 2023, representing a 7.0% decline compared with the previous year. The limited business profile assessment reflects SNIC’s concentration by geography and product, as the company solely operates in the highly competitive and relatively small Bahrain market, where it focuses on motor and medical insurance.

SNIC is an insurance subsidiary of E.A. Juffali & Brothers, a family owned conglomerate operating in Saudi Arabia. SNIC receives no rating enhancement or drag from this affiliation.

This press release relates to Credit Ratings that have been published on AM 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 see AM Best’s Recent Rating Activity web page. For additional information regarding the use and limitations of Credit Rating opinions, please view Guide to Best’s Credit Ratings. For information on the proper use of Best’s Credit Ratings, Best’s Performance Assessments, Best’s Preliminary Credit Assessments and AM Best press releases, please view Guide to Proper Use of Best’s Ratings & Assessments.

AM Best is a global credit rating agency, news publisher and data analytics provider specialising in the insurance industry. Headquartered in the United States, the company does business in over 100 countries with regional offices in London, Amsterdam, Dubai, Hong Kong, Singapore and Mexico City. For more information, visit www.ambest.com.

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