Market Overview

A.M. Best Revises Outlooks to Negative for SNIC Insurance B.S.C. (c)


A.M. Best has revised the outlooks to negative from stable and
affirmed the Financial Strength Rating of B+ (Good) and a Long-Term
Issuer Credit Rating of "bbb-" of SNIC Insurance B.S.C. (c)

These Credit Ratings (ratings) reflect SNIC's balance sheet strength,
which A.M. Best categorises as very strong, as well as its adequate
operating performance, limited business profile and marginal enterprise
risk management.

The revised outlooks reflect the deteriorating trend in SNIC's technical
results, combined with uncertainty over the company's ability to execute
its new business strategy successfully.

SNIC's balance sheet strength is underpinned by its risk-adjusted
capitalisation being at the strongest level, as measured by Best's
Capital Adequacy Ratio (BCAR). This is supported by low underwriting
leverage, strong liquidity, no financial leverage and a reinsurance
panel of good credit quality. Offsetting rating factors include the
company's high level of reinsurance dependence and the concentration of
its investment profile in an affiliated company, Wataniya Insurance
(Saudi Arabia).

SNIC's operating performance has benefitted from strong investment
performance in recent years, driving a five-year (2013-2018) average
return on equity of 3.5%. In 2017, technical performance deteriorated as
a result of a shift toward lower margin business, and strengthening of
technical provisions. SNIC's technical performance remains constrained
by its limited ability to attract quality business in tough market
conditions, coupled with its high expense base relative to its scale.
A.M. Best expects SNIC's long-term performance to improve as a result of
its new business strategy; however, over the medium term, the increased
level of capital expenditure is expected to place further strain on the
company's operating performance.

SNIC is an insurance subsidiary of E.A. Juffali & Brothers, a family
owned conglomerate operating in Saudi Arabia. The company benefits from
support and technical guidance provided by its other shareholders, Munich
Reinsurance Company
and Zurich Insurance Company Limited.
SNIC's business profile remains focused on general insurance and medical
health care insurance. The company's revenues benefit from some regional
diversification, with its direct Bahraini business supplemented by
inward facultative business from neighbouring markets. Despite SNIC's
access to regional markets, its business profile remains limited, with a
declining trend in gross written premium witnessed over the last three

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release and pertinent disclosures, including details of the office
responsible for issuing each of the individual ratings referenced in
this release, please see A.M. Best's
Rating Activity
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