Bahrain-headquartered Arig has received a licence from Dubai Financial Services Authority (DFSA) to operate its wholly owned new reinsurance subsidiary, Arig Insurance Management (AIM), while Bermuda-based Arch Re has launched Arch Reinsurance (Gulf) Limited (AUGL), to be based at the DIFC, subject to final approval from the DFSA.
AIM, which will mainly focus on facultative specialty lines with underwriting authority from Arig, will be led by newly appointed Senior Executive Officer Jehan Dias. He is a Swiss national with over 14 years in reinsurance. Prior to joining Arig, he served as Head of Facultative at Gulf Re.
“The recent upgrade in our rating along with the physical presence in the DIFC will reinforce Arig’s position on the facultative side which is (our) main target for expansion,” said Mr Yassir Albaharna, Arig’s CEO.
On 21 December 2016, A.M. Best upgraded the Group’s Financial Strength Rating from ‘B++ (Good)’ to ‘A- (Excellent)’, and its Long-Term Issuer Credit Rating from ‘bbb+’ to ‘a-’. The outlook for both ratings is stable.
“The rating upgrades reflect Arig’s ability to take strategic decisions to eliminate underperforming business segments and optimise its business profile to generate stronger prospective earnings,” said the rating agency. The ratings also reflect the reinsurer’s solid balance sheet strength and sound risk management framework.
Arch Re
AUGL will have underwriting authority for Arch Re, which holds a financial strength rating of ‘A+’ from S&P.
The new unit will complement Arch Re’s existing operating entity, Gulf Reinsurance (Gulf Re), in the DIFC. In 2015, Arch Re completed the acquisition of Gulf Re from its joint venture partner, Gulf Investment Corporation.
As part of that process, Arch Re has put in place two reinsurance arrangements to demonstrate its full commitment to Gulf Re: a Loss Portfolio Transfer Agreement whereby Arch Re assumes 100% of all liabilities in respect of business written by Gulf Re prior to 30 September 2014; and a Quota Share Agreement whereby Arch Re assumes 90% of all liabilities in respect of business written by Gulf Re after 1 October 2014.
All existing Gulf Re clients and brokers will be given the opportunity to renew, through AUGL, with the more highly rated paper of Arch Re Bermuda.
“When we stepped back and considered the best value proposition to Gulf Re’s GCC clients, it made sense to provide Arch Re’s A+ rated balance sheet directly to our cedants, given Arch Re’s 100% ownership of Gulf Re,” said Mr Shankar Majrekar, AUGL’s Senior Executive Officer.
AUGL will benefit from the local knowledge and experience of the current Gulf Re underwriting team, which will continue to service all in-force business of Gulf Re in a seamless manner from its offices situated in the DIFC.
AUGL’s objective will be to maintain and build on existing client relationships.
Gulf Re’s paid-up capital of US$70 million and DFSA licence will be maintained by Arch Re until all policyholder liabilities are settled.