LONDON: AM Best has affirmed the Financial Strength Rating of A- (Excellent) and the Long-Term Issuer Credit Rating of “a-” of Bahrain Kuwait Insurance Company.
The outlook of these Credit Ratings (ratings) remains stable.
The ratings reflect Bahrain Kuwait Insurance’s balance sheet strength, which AM Best categorises as very strong, as well as its strong operating performance, neutral business profile and appropriate enterprise risk management. The ratings also factor in the financial strength of Bahrain Kuwait Insurance’s parent company, Gulf Insurance Group K.S.C.P. (GIG), due to its strategic importance to the group.
Bahrain Kuwait Insurance’s balance sheet strength is underpinned by consolidated risk-adjusted capitalisation, which remained at the strongest level as at year-end 2018, as measured by Best’s Capital Adequacy Ratio (BCAR).
The consolidated balance sheet, including subsidiary Takaful International Company BSC (Bahrain Kuwait Insurance Takaful), benefits from a relatively conservative asset allocation and a well-rated reinsurance panel, which mitigates the heightened credit risk associated with the company’s high cessions on commercial risks. AM Best expects consolidated risk-adjusted capitalisation to remain at the strongest level over the medium term.
The operating performance assessment of strong takes into account Bahrain Kuwait Insurance’s excellent track record of generating technical and operating profits, reporting a five-year (2014-2018) average combined ratio of 83% on a standalone basis. Bahrain Kuwait Insurance Takaful’s technical profitability has not been as strong historically; however, Bahrain Kuwait Insurance has introduced its underwriting philosophy to the subsidiary, and AM Best expects Bahrain Kuwait Insurance Takaful’s prospective performance to improve.
Bahrain Kuwait Insurance reported a consolidated combined ratio of 93% as at year-end 2018. AM Best expects operating performance to improve prospectively, as Bahrain Kuwait Insurance aligns its core business functions and achieves synergies with the subsidiary.
The business profile assessment of neutral reflects Bahrain Kuwait Insurance’s market-leading position in Bahrain’s insurance market and its strong position in Kuwait.
Bahrain Kuwait Insurance maintains an excellent domestic franchise, which has been strengthened further following its acquisition of Bahrain Kuwait Insurance Takaful.
Bahrain Kuwait Insurance Company operates in Bahrain and Kuwait and writes a well-diversified portfolio on a gross premium basis; however, on a net premium basis, its portfolio is concentrated heavily toward motor risks.