A.M. Best withdraws credit ratings of Saudi United Cooperative Insurance Company (Wala'a)
A.M. Best has affirmed the Financial Strength Rating of B+ (Good) and the Long-Term Issuer Credit Rating of “bbb-” of Saudi United Cooperative Insurance Company (Wala’a) (Saudi Arabia).
The outlook of these Credit Ratings (ratings) remains stable. Concurrently, A.M. Best has withdrawn the ratings as the company has requested to no longer participate in A.M. Best’s interactive rating process.
The ratings reflect the company’s improving technical profitability, adequate level of risk-adjusted capitalisation and developing profile within its domestic insurance market. An offsetting rating factor is the volatility in the company’s technical performance in recent years.
The company’s risk-adjusted capitalisation has strengthened over the past two years and remains supportive of the current ratings. Whilst a successful rights issue boosted paid-up capital by SAR 200 million in 2015, the benefit of the capital injection was tempered by a significant growth in net premium and reserve risk, coupled with an underwriting loss in 2015. The company’s capital position stabilised in 2016 amid a return to underwriting and operating profitability.
The company’s underwriting income has declined in recent years, with combined ratios in excess of 100 per cent in 2014 and 2015. However, strategic decisions taken by management to improve results in its key motor line of business, such as enforcement of actuarial based pricing and a more focused sales approach, have seen underwriting profits improve in 2016. Unaudited accounts for 2016 indicate a materially improved combined ratio of 74 per cent.