AM Best has affirmed SNIC Insurance rating (an associate of Munich Re Group one of the world’s largest reinsurers and a subsidiary of E.A. Juffali & Brothers a family-owned conglomerate operating in Saudi Arabia) with Financial Strength Rating of B+ (Good) and the Long-Term Issuer Credit Rating (Long-Term ICR) of “bbb-“. The outlook of these Credit Ratings (ratings) remains negative.
Mr. Khalid Al Shaikh General Manager commented: “We welcome AM Best rating of SNIC Insurance, which shows the effectiveness of our strategy initiatives, reflecting positively on the balance sheet and operating performance”.
The ratings reflect the strength of SNIC’s balance sheet, which AM Best categorises as very strong, as well as its adequate operating performance, despite its limited business profile and marginal enterprise risk management. The assessment of the balance sheet, as very strong, is underpinned by its risk-adjusted capitalisation being at the strongest level, as measured by Best’s Capital Adequacy Ratio (BCAR), although with a reduced capital buffer in recent years. Offsetting rating factors include the company’s high level of reinsurance dependence, although the associated credit risk is mitigated partly by a well-rated reinsurance panel, and the concentration of its investment profile in an affiliated company, Wataniya Insurance Company.
SNIC’s adequate operating performance assessment reflects its positive earnings, with an average five-year return on equity (2015-2019) of 4%. The company has embarked on a strategy to strengthen underwriting returns through restructuring its business model to focus on partnerships and to offer employee benefit solutions. SNIC has reported a modest improvement in its underwriting performance in 2019 and the first half of 2020.
The negative outlooks are due to the adjusted risk capitalization in recent years because of the heavy expenditure in the implementation of its digital transformation strategy for the objective of enhancing the customer experience and agility.
AM Best notes that SNIC has undertaken initiatives to improve its capital position and technical performance, and these measures will reflect positively in restoring a stable outlook in the coming year.
Mr. Khalid Al Shaikh commented, “ Despite Covide-19 challenges, we shall continue implementing our strategy as planned for 2021 and in the coming years to reflect positively on the company’s balance sheet, operation results and our long -term outlook whilst focusing on meeting the changing needs of our customers”.