A.M. Best Downgrades Ratings of Arabia Insurance Cooperative Company Business Wire LONDON -- August 1, 2013 A.M. Best Europe – Rating Services Limited has downgraded the financial strength rating to B- (Fair) from B++ (Good) and the issuer credit rating to “bb-” from “bbb” of Arabia Insurance Cooperative Company (AICC) (Saudi Arabia). Both ratings have been removed from under review with negative implications and assigned a negative outlook. The rating downgrades reflect the significant deterioration in AICC’s risk-adjusted capitalisation during the first half of 2013, following large underwriting losses and the cancellation of a substantial reinsurance contract. In the second quarter of 2013, AICC reported an overall loss of SAR 43.5 million (USD 11.6 million), equal to 26% of its reported capital and surplus as at year-end 2012. Additionally, AICC cancelled a proportional reinsurance contract mid-year, which was expected to provide material capital relief and partially offset its high level of underwriting leverage. Given the scale of AICC’s losses in the first half of 2013, it is unlikely that underwriting profits alone will be sufficient to replenish its capital in the short term, and the company may need to seek alternative options in order to alleviate capital pressures. Moreover, the deterioration in AICC’s risk-adjusted capitalisation raises significant concerns over its risk management practices. The assigned negative outlook reflects A.M. Best’s uncertainty over AICC’s prospective risk-adjusted capitalisation. If the company is unable to demonstrate that its risk-adjusted capitalisation will be maintained at a fair level over the medium term, the ratings are likely to be further downgraded. Upward rating pressure could arise if AICC is able to materially improve its risk-adjusted capitalisation. The methodology used in determining these ratings is Best’s Credit Rating Methodology, which provides a comprehensive explanation of A.M. Best’s rating process and contains the different rating criteria employed in the rating process. 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 Tim Prince Senior Financial Analyst +(44) 20 7626 0320 email@example.com or Mahesh Mistry Director +(44) 20 7626 0325 firstname.lastname@example.org or Rachelle Morrow Senior Manager, Public Relations +(1) 908 439 2200, ext. 5378 email@example.com or Jim Peavy Assistant Vice President, Public Relations +(1) 908 439 2200, ext. 5644 firstname.lastname@example.org
A.M. Best Downgrades Ratings of Arabia Insurance Cooperative Company
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