AM Best Affirms Credit Ratings of The Bahrain National Insurance Company

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 and unlisted securities representing 51% of shareholders’ equity at year-end 2021.

BNI has a track record of strong operating performance, demonstrated by five-year (2017-2021) return on equity (ROE) of 14.0%. Improving technical profitability in recent years, following the negative effect one-off reserves strengthening incurred in 2017 and 2018, has supported a solid five-year (2017-2021) weighted average combined ratio of 93.0% (2016-2020: 106.2%). Operating performance remained strong in 2021, translating in a ROE of 20.1% (2020: 18.4%) and a combined ratio of 78.1% (2020: 81.6%). Going forward, AM Best expects the company’s returns to remain strong prospectively.

BNI has a well-established franchise as one of the largest non-life insurance companies in Bahrain, where it wrote gross written premium of BHD 27.0 million (USD 72.1 million) in 2021. In particular, the company holds a market-leading position in the motor line of business. 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.

This press release relates to Credit Ratings that have been published on AM Best’s website. For all rating information relating to the release and pertinent disclosures, including details of the office responsible for issuing each of the individual ratings referenced in this release, please see AM Best’s Recent Rating Activity web page. For additional information regarding the use and limitations of Credit Rating opinions, please view Guide to Best’s Credit Ratings. For information on the proper use of Best’s Credit Ratings, Best’s Performance Assessments, Best’s Preliminary Credit Assessments and AM Best press releases, please view Guide to Proper Use of Best’s Ratings & Assessments.

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