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A.M. Best Upgrades Credit Ratings of Arab Insurance Group (B.S.C.)

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A.M. Best Upgrades Credit Ratings of Arab Insurance Group (B.S.C.)

A.M. Best has upgraded the Financial Strength Rating to A-(Excellent) from B++ (Good) and the Long-Term Issuer Credit Rating to"a-" from "bbb+" for Arab Insurance Group (B.S.C) (Arig) (Bahrain). Theoutlook of these Credit Ratings (ratings) has been revised to stable frompositive.

The rating upgrades reflect Arig's ability to takestrategic decisions to eliminate underperforming business segments and optimiseits business profile to generate stronger prospective earnings. The measurestaken by management have resulted in improved technical performance, with Arigdelivering a 90% combined ratio in the first three quarters of 2016. Theratings also consider Arig's solid balance sheet strength and sound risk managementframework.

Arig maintains a strong brand name in the Middle East andNorth African reinsurance market, built upon the company's excellent reputationand its long-standing relationships with cedants. In addition, the companybenefits from its exposure to the Lloyd's market via its investment in ArigCapital Limited (a corporate member at Lloyd's). Participation in Lloyd'ssyndicates that focus on specialty lines represents just over one-third of thecompany's gross written premium. The majority of Arig's reinsurance portfoliois written on a treaty basis and is not heavily exposed to naturalcatastrophes. Going forward, the composition of Arig's underwriting portfoliois not expected to change materially; however, moderate increases infacultative business are anticipated as the company looks to target highermargin products. Additionally, following a shareholder decision, (Takaful Re), asubsidiary of the company, ceased underwriting from the fourth quarter of 2015,and its insurance portfolio has been put into runoff. A.M. Best believes thisdecision will allow Arig to focus its strategy on its core segments and highermargin business lines, improving underwriting profitability.