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Apr 2021

Bahrain: Takaful company expected to have maintained profitability in 2020

Source: Middle East Insurance Review | Mar 2021

Takaful company Solidarity Bahrain’s operating performance is expected to remain adequate over the medium term, supported by positive and improving technical profitability, as well as moderate investment income, said AM Best.
 
In 2019, the company reported a return on equity of 11.7%.
 
Similar profitability is expected for 2020, as a result of continued underwriting discipline and a reduction in claims levels resulting from the restrictions imposed by the government in response to the COVID-19 pandemic.
 
AM Best has affirmed the Financial Strength Rating of B++ (Good) and the Long-Term Issuer Credit Rating of “bbb+” of Solidarity Bahrain. The outlook of these credit ratings is stable.
 
Balance sheet strength
The ratings reflect Solidarity Bahrain’s balance sheet strength, which AM Best categorises as very strong, as well as its adequate operating performance, limited business profile and appropriate enterprise risk management. The ratings also consider, in the form of lift, Solidarity Bahrain’s strategic importance to its parent company, Solidarity Group Holding, a leading provider of Islamic insurance solutions in Bahrain and Jordan.
 
Solidarity Bahrain’s balance sheet strength is underpinned by its risk-adjusted capitalisation at the strongest level, as measured by Best’s Capital Adequacy Ratio, its strong level of liquidity, and its good financial flexibility, with access to the capital markets. Offsetting factors include the company’s high dependence on reinsurance and elevated asset risk due to the concentration of its investments in Bahrain and the GCC region.
 
Solidarity Bahrain is a leading insurer in Bahrain, with GWP of BHD30.9m ($82.3m) in 2019. However, the company’s business profile remains constrained by its concentration in Bahrain, which is a relatively small and very competitive insurance market. M 
 
BHD1 = $2.70
 
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