AM Best has removed from under review with developing implications and affirmed the Financial Strength Rating of B++ (Good) and the Long-Term Issuer Credit Rating of ‘bbb+’ (Good) of
The outlook assigned to these Credit Ratings (ratings) is stable.
The ratings reflect SFIC’s balance sheet strength, which AM Best assesses as very strong, as well as its adequate operating performance, limited business profile and appropriate enterprise risk management. The ratings also consider, in the form of lift, SFIC’s strategic importance to its parent company, Solidarity Group Holding BSC (SGH), a leading provider of Islamic insurance solutions in
The rating actions follow the completion of the acquisition by
SFIC’s balance sheet strength is underpinned by its risk-adjusted capitalisation at the strongest level, as measured by Best’s Capital Adequacy Ratio (BCAR). AM Best assesses the company’s risk-adjusted capitalisation on a combined basis, including its policyholders’ and shareholders’ funds, due to the strength of local regulation and the resulting expectation that the shareholders’ fund would have to support the policyholders’ fund if required. AM Best expects SFIC’s prospective combined risk-adjusted capitalisation to remain comfortably above the minimum required to support the strongest assessment over the medium term. The company’s balance sheet strength benefits from an unleveraged balance sheet and good liquidity, with liquid assets covering net insurance reserves 1.4 times at year-end 2021. Offsetting factors include the elevated asset risk due to the concentration of the company’s investments in
The company has a track record of adequate operating performance, demonstrated by a five-year (2017-2021) weighted average return on equity of 6.8%, supported by stable underwriting and investment performance. Despite tariffed mandatory motor third-party liability business being technically unprofitable across
SFIC benefits from a good competitive position in its domestic insurance market, supported by a strong distribution network. Over recent years, the company has consistently grown organically and inorganically, with a five-year (2017-2021) compound average growth rate of 4.4%, leading to gross written contributions of JOD 49.1 million (
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