A.M. Best Affirms Ratings of The Bahrain National Insurance Company BSC (c)

12/22/2015 1:36:24 AM -

LONDON, 22 December 2015—A.M. Best has affirmed the financial strength rating of B++ (Good) and the issuer credit rating of “bbb+” of The Bahrain National Insurance Company BSC (c) (BNI) (Bahrain). The outlook for both ratings is stable.


The ratings reflect BNI’s solid risk-adjusted capitalisation, good track record of operating profitability and strong domestic business profile. An offsetting rating factor is the limited growth potential of its domestic market driven by the current low oil price environment.


BNI’s risk-adjusted capitalisation remained solid in 2014, despite a gradual decline in recent years stemming from high dividend distributions and net premium growth. BNI’s low level of premium retention on commercial risks drives an elevated level of counterparty credit risk in the event of large losses. Accordingly, the company maintains a well-rated reinsurance panel to mitigate against this risk. Prospective risk-adjusted capitalisation is expected to remain supportive of the rating, despite retained earnings being tempered by BNI’s dividend policy.


In 2014, BNI maintained its good track record of profitability, supported by robust technical performance and solid investment returns, with the company recording net income of BHD 3.3 million (USD 8.9 million). Consistent underwriting profitability is underlined by a five-year average combined ratio of 85%, benefiting from strong performance on the motor book, as well as inward reinsurance commissions on all other business lines due to high reinsurance dependence. Investment income continues to supplement underwriting performance, demonstrated by a five-year average investment yield of 5%. The interim results for 2015 are in line with the recent performance trends of the company, with robust underwriting and investment results.


BNI’s strong business profile within Bahrain’s market is reinforced by its leading position in the motor segment, with an estimated market share of 16% and its extensive distribution network. Outside of the motor market, BNI continues to enjoy a good business profile, as one of the largest non-life insurers (excluding medical) in the market, and continues to target large domestic fire and engineering contracts as a key growth driver, in order to increase both profile and operational scale. BNI achieved 19% gross written premium growth over 2014, largely driven by this strategy.

Partially offsetting these rating factors is the intense competition within Bahrain’s market and the elevated economic, political and financial system risks associated with operating there, which, when coupled with depressed oil prices, could impact growth opportunities for BNI.