A.M. Best Co. has affirmed the financial strength rating of “B++” (Very Good) and the issuer credit rating of “bbb” of Trust International Insurance Company B.S.C. (c) Bahrain (TIIC). The outlook for both ratings remains stable.
“The ratings reflect TIIC’s diversified business profile, good operating performance and solid risk-adjusted capitalization,” said Best. “An offsetting factor is the company’s high investment risk.”
Best noted that it its opinion “TIIC has a distinctive business profile in the Arab and Afro-Asian markets. Effective from underwriting year 2002, TIIC diversified its profile both by product offering and geographic location, by means of a quota share agreement with its subsidiary, Trust Underwriting Ltd. (TUL), which is a corporate Lloyd’s vehicle.”
Best said it “expects that TIIC’s overall operating performance is likely to remain good and will continue to generate underwriting profit, although at a reduced level, in both 2006 and 2007 due to a higher combined ratio on TUL business. At the same time, net investment return (including realized gains and losses but excluding unrealized gains and losses) is expected to remain modest at approximately 4 percent.
The rating agency also indicated that it “believes that the current volatility prevailing in the Qatari stock market, where most of TIIC’s share investments are listed, will result to a decline in revaluation reserves by year-end 2006. This is likely to result in a decline in risk-adjusted capitalization, though A.M. Best expects it to remain strong due to the continuation of strong retained earnings. Investment concentration risk remains high as evidenced by the fact that 65 percent of total investments at year-end 2005 were shares in a single company.”
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