A.M. Best Places Ratings of ARABIA Insurance Cooperative Company Under Review with Negative Implications Business Wire LONDON -- March 28, 2013 A.M. Best Europe – Rating Services Limited has placed the financial strength rating of B++ (Good) and the issuer credit rating of “bbb” of ARABIA Insurance Cooperative Company (AICC) (Saudi Arabia) under review with negative implications. The rating action reflects a deterioration of AICC’s level of risk-adjusted capitalisation following significant growth and an overall loss in 2012. The company’s management has the second quarter of 2013 to update its business plans and demonstrate how AICC’s level of risk-adjusted capitalisation will be improved to a good level over the short and medium term. A.M. Best will review the ratings before the end of July 2013. Underwriting risks drive AICC’s level of risk-adjusted capitalization, and in 2012 the company increased its net written premium base by 42% to SAR 498 million. During the same period, the company incurred a net loss for the year, and its capital and surplus decreased by SAR 7 million to SAR 167 million. Since inception, AICC’s gross premium leverage (gross premiums written / capital and surplus) increased from around 1.7 in 2009 to approaching 4 in 2012. It is this high level of business leverage that drives AICC’s level of risk-adjusted capitalisation. A material reduction in net premium risk and credit risk is expected in 2013; however, A.M. Best needs more time to evaluate the impact of the reduction on the company’s prospective level of risk-adjusted capitalisation. A rating downgrade could occur if AICC’s level of risk-adjusted capitalisation fails to improve to a good level over the short term. The methodology used in determining these ratings is Best’s Credit Rating Methodology, which provides an extensive explanation of A.M. Best’s rating process and contains the different rating criteria employed in the rating process. Key criteria utilised include: “Rating Members of Insurance Groups”; “Catastrophe Analysis in Best’s Ratings”; “Risk Management and the Rating Process for Insurance Companies”; “Evaluating Country Risk”; and “Understanding Universal BCAR”. Best’s Credit Rating Methodology can be found at www.ambest.com/ratings/methodology. In accordance with Regulation (EC) No. 1060/2009, the following is a link to required disclosures: A.M. Best Europe - Rating Services Limited Supplementary Disclosure. A.M. Best Europe – Rating Services Limited is a subsidiary of A.M. Best Company. A.M. Best Company is the world's oldest and most authoritative insurance rating and information source. For more information, visit www.ambest.com. Copyright © 2013 by A.M. Best Company, Inc. ALL RIGHTS RESERVED. Contact: A.M. Best Company Timothy Prince, +(44) 20 7397 0320 Senior Financial Analyst firstname.lastname@example.org or Rachelle Morrow, +1-908-439-2200, ext. 5378 Senior Manager, Public Relations email@example.com or Mahesh Mistry, +(44) 20 7397 0325 Director firstname.lastname@example.org or Jim Peavy, +1-908-439-2200, ext. 5644 Assistant Vice President, Public Relations email@example.com
A.M. Best Places Ratings of ARABIA Insurance Cooperative Company Under Review with Negative Implications
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