A.M. Best affirms B+ rating of Arab Re
Thursday, 12 21 2017, Category: Insurance and Reinsurance, Country: Lebanon
A.M. Best has affirmed the Financial Strength Rating of B+ (Good) and the Long-Term Issuer Credit Rating of “bbb-” of Arab Reinsurance Company S.A.L. (Arab Re) (Lebanon). The outlook of these Credit Ratings (ratings) remains stable.
The ratings reflect Arab Re’s balance sheet strength, which A.M. Best categorises as very strong, as well as its marginal operating performance, neutral business profile and appropriate enterprise risk management.
Arab Re’s risk-adjusted capitalisation, as measured by Best’s Capital Adequacy Ratio (BCAR), remains at the strongest level, reflective of the company’s low underwriting leverage. Risk-adjusted capitalisation strengthened in 2015 and 2016, following the shareholders’ decision to forgo dividend payments. With shareholders’ equity reaching USD 101.9 million at year-end 2016, Arab Re’s capital base is sufficient to absorb the asset and credit risks arising from elevated exposure to Lebanese investments, notably Lebanese sovereign debt, and unrated reinsurance recoverables.
Arab Re has a stable business profile in its core markets in the Middle East and North Africa (MENA) region, which is built upon the company’s original role as a reinsurer for the Arab insurance market and its longstanding strong relationships with cedants. Whilst the company’s profile remains underpinned by its wide coverage and access to business throughout the MENA region, it was impacted by the decision to withdraw from non-core markets in Asia and Europe. Arab Re also has been reducing its share in specific ac