LONDON: A.M. Best has affirmed the financial strength rating of B++ and the long-term issuer credit rating of bbb+ of The Bahrain National Insurance Company BSC (c) (bni) (Bahrain). The outlook is stable.
The ratings reflect bni’s balance sheet, which is categorised as very strong, said A.M. Best, as well as its strong operating performance, limited business profile and appropriate enterprise risk management.
“bni’s strong balance sheet is underpinned by risk-adjusted capitalisation at the strongest level, high degree of liquidity and well-rated reinsurance panel,” Rating Agency in its report said.
bni’s capital requirements, as measured by AM Best’s Capital Adequacy Ratio, continue to be driven by asset risk. Whilst the company has significant exposure to equities and other unlisted securities, which accounted for 36% of the total investments at the end of 2016, its investment portfolio is considered to be well-managed and diversified in terms of asset class and geographical distribution.
bni has a track record of strong operating and technical profitability, illustrated by a five-year average (2012-2016) return on equity of 14% and combined ratio of 88%. In 2016, whilst underwriting profit remained stable at BD 1.3 million ($3.4 million), net profit decreased by 18% to BD2.7 million ($7.2 million), driven by lower contribution of realised investment gains from local equity investments.
“Despite increasing competitive market pressures in Bahrain, bni’s prudent approach to risk selection and focus on profitability over growth is expected to support the company’s continued strong technical performance,” it added.
“With an estimated 15% market share in 2016, bni has a leading position in its domestic insurance market, with a strongly established franchise in the motor line of business. Whilst benefitting from a strong brand and good reputation locally, the company remains concentrated to Bahrain, which offers limited growth opportunities and constrains bni’s business profile.”
