A.M. Best assigns credit ratings to Al Ahlia Insurance Company B.S.C.
A.M. Best has assigned a Financial Strength Rating (FSR) of B++ (Good) and a Long-Term Issuer Credit Rating (Long-Term ICR) of “bbb” to Al Ahlia Insurance Company B.S.C. (AAIC) (Bahrain).
The outlook assigned to the FSR is stable, while the outlook assigned to the Long-Term ICR is positive.
The ratings reflect Al Ahlia’s balance sheet strength, which A.M. Best categorises as very strong, as well as its adequate operating performance, limited business profile and appropriate enterprise risk management. The ratings also reflect the company’s strategic importance to its ultimate parent company, Solidarity Group Holding BSC (c) (SGH), a leading provider of Islamic insurance solutions in Bahrain and Jordan. The positive Long-Term ICR outlook reflects the potential benefits of an enhanced business profile of the Solidarity group that would result from the successful integration of AAIC into its operations.
AAIC, a company listed on the Bahrain Bourse, was acquired by SGH in December 2016 as part of the group’s expansion strategy. In line with their plan, SGH successfully completed the merger of Solidarity General Takaful BSC (c) (SGT) into AAIC on 3 December 2017, with the entity expected to be rebranded Solidarity Bahrain in the coming weeks.
AAIC’s very strong balance sheet assessment is underpinned by risk-adjusted capitalisation at the strongest level, supported by low underwriting leverage and a reinsurance panel of good credit quality, good liquidity and no debt leverage. AAIC’s risk-adjusted capitalisation is measured on a consolidated basis (integrating shareholders’ and policyholders’ funds) given the strength of regulation in Bahrain and the protection it provides to policyholders.
AAIC’s operating performance is expected to remain adequate, as the new management team has taken actions to improve the profitability of AAIC’s legacy operations, which should translate into good technical performance for the merged entity, in line with SGT’s track record of profitability. Following the merger, the company is expected to have a leading position in its domestic market, writing primarily motor and medical insurance via an established network of branches in the kingdom. However, the company remains concentrated in Bahrain, which offers limited growth opportunities and constrains the business profile assessment.