Bahrain-based FAIR Oil & Energy Insurance Syndicate has a track record of robust underwriting performance, demonstrated by a four-year (2022-2025) weighted average net/net combined ratio of 78.6%, as calculated by AM Best.
In 2025, however, the Syndicate reported several large losses (based on preliminary financials), contributing to a poor underwriting result. Such low-frequency, high-severity losses are expected given the Syndicate’s risk profile.
Investment returns, in the current high-interest rate environment, continue to contribute positively to overall profitability.
AM Best has affirmed the Syndicate’s Financial Strength Rating of ‘B++’ (Good) and the Long-Term Issuer Credit Rating of ‘bbb’ (Good). The outlook of these credit ratings is stable.
Balance sheet
The ratings reflect the Syndicate’s balance sheet strength, which AM Best assesses as strong, as well as its strong operating performance, limited business profile and appropriate enterprise risk management.
The Syndicate’s balance sheet strength assessment is underpinned by its risk-adjusted capitalisation, which is comfortably at the strongest level, as measured by Best’s Capital Adequacy Ratio (BCAR). AM Best expects the Syndicate’s BCAR scores to remain at this level prospectively, supported by robust capital generation, a conservative investment portfolio and a retrocession panel of good financial strength.
The permanence of capital is a risk for the Syndicate; however, this is mitigated by stringent controls on surplus distribution and a long withdrawal notification period, as agreed by the Syndicate’s general assembly. Between 2015 and 2025, 100% of surplus generated by the Syndicate was retained.
Business profile
The Syndicate is one of four reinsurance vehicles formed by the Federation of Afro-Asian Insurers and Reinsurers (FAIR), with a remit to underwrite energy business. Members are drawn from participants of FAIR, who subscribe to the Syndicate’s units of capacity. As at year-end 2025, the Syndicate consisted of 21 members from across the Africa, Middle East and Asia regions. Whilst unique in its legal structure, the Syndicate operates like a traditional reinsurer, providing capacity and expertise to its members as well as third-party cedants.
Although small, the Syndicate has a niche profile and a strong reputation in the energy insurance market. Whilst concentrated by line of business, the Syndicate benefits from growing geographical diversification across its portfolio. The Syndicate’s stable member base provides it with good access to energy risks across the Afro-Asian territories, supplemented by business written on the open market across the region.