Bahrain Kuwait Insurance (gig-Bahrain) is expected to improve its operating performance, as the company aligns its core business functions and achieves synergies with its subsidiary, Takaful International, says AM Best.
The operating performance assessment, categorised as 'Strong', takes into account gig-Bahrain’s excellent track record of generating technical and operating profits, reporting a five-year (2014-2018) average combined ratio of 83% on a standalone basis. gig-Bahrain reported a consolidated combined ratio of 93% for 2018.Takaful International’s technical profitability has not been as strong historically; however, gig-Bahrain has introduced its underwriting philosophy to the subsidiary, notes the international credit rating agency.
AM Best has affirmed the Financial Strength Rating of A- (Excellent) and the Long-Term Issuer Credit Rating of “a-” of gig-Bahrain. The outlook of these credit ratings (ratings) remains stable.
The ratings reflect gig-Bahrain’s balance sheet strength, which AM Best categorises as very strong, as well as its strong operating performance, neutral business profile and appropriate enterprise risk management. The ratings also factor in the financial strength of gig-Bahrain’s parent company, Gulf Insurance Group (GIG), due to its strategic importance to the group.
gig-Bahrain’s balance sheet strength is underpinned by consolidated risk-adjusted capitalisation, which remained at the strongest level as at year-end 2018. The consolidated balance sheet, including Takaful International, benefits from a relatively conservative asset allocation and a well-rated reinsurance panel, which mitigates the heightened credit risk associated with the company’s high cessions on commercial risks. AM Best expects consolidated risk-adjusted capitalisation to remain at the strongest level over the medium term.
The business profile assessment, categorised as 'Neutral' reflects gig-Bahrain’s leading position in Bahrain’s insurance market and its strong position in Kuwait. gig-Bahrain maintains an excellent domestic franchise, which has been strengthened further following its acquisition of Takaful International. The company operates in Bahrain and Kuwait and writes a well-diversified portfolio on a gross premium basis; however, on a net premium basis, its portfolio is concentrated heavily toward motor risks.