LONDON–(COMMERCIAL THREAD) –AM Best confirmed the financial strength rating of B ++ (good) and the long-term issuer credit rating of âbbb +â (good) of The Bahrain National Insurance Company BSC (c) (BNI) (Bahrain). The outlook for credit ratings is stable.
The ratings reflect the strength of BNI’s balance sheet, which AM Best considers to be very strong, as well as its strong operational performance, limited business profile and appropriate management of corporate risks.
BNI’s balance sheet strength relies on risk-adjusted capitalization at the highest level, as measured by Best’s capital adequacy ratio (BCAR), robust liquidity and a well-diversified investment portfolio by class. ‘assets. Compensating factors include a heavy reliance on reinsurance. The strengthening of reserves was required in 2017 and 2018 following an external actuarial review and has led the company to adopt more prudent reserve practices. AM Best expects BNI’s risk-adjusted capitalization to remain at the highest level over the medium term, despite the company’s high exposure to equities, real estate and other unlisted securities (58 % of equity at end 2020), which exposes capital adequacy to potential volatility.
BNI’s operational performance in 2020 remained at a high level, demonstrated by a robust combined ratio of 81.6%, up from 106.2% in 2017, and return on equity of 18.4%. AM Best expects the company’s potential returns to be at a similar level in 2020.
BNI has a well-established franchise as one of the largest non-life insurance companies in Bahrain, where it holds a leading position in the automotive market. Although BNI enjoys a strong brand and a good reputation locally, the assessment of the company’s business profile is limited by its concentration in Bahrain, which has a small insurance market that offers limited profitable growth opportunities.
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