AM Best has affirmed the Financial Strength Rating of B++ (Good) and the Long-Term Issuer Credit Rating of “bbb+” (Good) of The Bahrain National Insurance Company BSC (c) (BNI) (Bahrain). The outlook of these Credit Ratings (ratings) is stable.

The ratings reflect BNI’s balance sheet strength, which AM Best assesses as very strong, as well as its strong operating performance, limited business profile and appropriate enterprise risk management.

BNI’s balance sheet strength is underpinned by its risk-adjusted capitalisation at the strongest level, as measured by Best’s Capital Adequacy Ratio (BCAR), robust liquidity, and a well-diversified investment portfolio by asset class. AM Best expects BNI’s risk-adjusted capitalisation to remain at the strongest level over the medium term, supported by internal capital generation despite relatively high dividend distributions to its parent, Bahrain National Holding Company BSC. Partially offsetting rating factors include high reinsurance dependence and elevated asset risk, with exposure to equities, real estate, unlisted securities, and other illiquid investments representing 35% of shareholders’ equity at year-end 2022.

BNI has a track record of strong operating performance, demonstrated by five-year (2018-2022) return on equity (ROE) of 17.2% (2022: 18.7%). Improving technical profitability in recent years, have supported a solid five-year (2018-2022) weighted average combined ratio of 86.9%. Operating performance remained strong in 2022, translating in a ROE of 18.7% (2021: 20.1%) and a combined ratio of 79.7% (2021: 78.1%), with strong operating performance continuing into the first half of 2023 with annualised ROE reaching 22.7%. Going forward, AM Best expects BNI’s operating performance to remain commensurate with a strong assessment.

BNI has a well-established franchise as one of the largest non-life insurance companies in Bahrain, where it reported gross written premium of BHD 27.2 million (USD 72.5 million) in 2022 (six months 2023: BHD 14.5 million). In particular, the company has market leading position in the motor line of business in Bahrain, that represents the majority of business on a net basis. Although BNI benefits from a strong brand and good reputation locally, the company’s business profile assessment is constrained by its concentration to Bahrain’s small and highly competitive non-life insurance market.

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