MANAMA: Trading in shares of Arab Insurance Group (Arig) was suspended by the Bahrain Bourse yesterday, with the stock exchange saying material information on the company was pending.
This follows the reinsurance provider reporting consolidated net profit of $1.8 million for the first quarter 2019 as against $0.5m in Q1 2018.
The improved result was mainly due to higher consolidated investment income of $10.4m (Q1 2018: $5.1m) as a result of positive global markets, the company said in a bourse filing on Monday.
Last month, in a disclosure to BHB, Arig said an investigation by the Central Bank of Bahrain (CBB) uncovered “glaring deficiencies” in the company’s governance framework.
The CBB formally directed Arig to implement a number of actions to address the lack of strategic direction that it identified in the company.
Actions include the appointment of a permanent chief executive, the suspension of all decisions relating to the lay off and closure of overseas offices, and the fulfilment of all vacant core and critical business functions.
Arig was also directed to strengthen its corporate governance framework and seek a rating from the rating agency, as it is currently operating with an unrated status.
The reinsurer said its board of directors was in the process of reviewing the formal direction of the CBB.
This came after AM Best downgraded Arig and withdrew its credit ratings for the company last month to reflect its “marginal” operating performance.
The rating agency revised Arig’s long-term credit rating to bbb from bbb+, affirmed its financial strength rating of B++ (Good), and reduced its outlook to negative from stable.
The financials Press release for Q1 says Arig’s subsidiaries include Takaful Re (Dubai) – currently in run-off, Gulf Warranties (Bahrain) (under voluntary liquidation) and Arig Capital (UK).
Run-off is used to describe an insurance company that is being wound up or otherwise not underwriting business in a particular line.
It is thus letting its present insurance policies run to their expiration dates.
The company could not be reached for comment yesterday.
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