A.M. Best Affirms Ratings of ARABIA Insurance Company s.a.l.

  A.M. Best Affirms Ratings of ARABIA Insurance Company s.a.l.  Business Wire  LONDON -- March 28, 2014  A.M. Best has affirmed the financial strength rating of B++ (Good) and the issuer credit rating of “bbb+” of ARABIA Insurance Company s.a.l. (AIC) (Lebanon). The outlook for both ratings remains stable.  The ratings reflect AIC’s sound risk-adjusted capitalisation and well-diversified business profile. Offsetting rating factors are the company’s concentrated equity portfolio and the high level of economic and political risk associated with operating in Lebanon.  AIC’s risk-adjusted capitalisation remains supportive of the current rating level. Prospective risk-adjusted capitalisation is expected to be dependent on future earnings retention, growth of AIC’s market profile and fluctuations in the market value of its strategic affiliate, ARABIA Insurance Cooperative Company (AICC).  In recent years, AIC has experienced robust operating performance across its main markets. However, in 2013 the combined ratio rose above 100%, largely resulting from underwriting losses in Lebanon. While AIC’s exposure to AICC is limited to a 20% shareholding, there are concerns regarding its weak operating performance and deteriorating financial position over the past two years. Additionally, AIC may face a reputational risk should AICC’s position worsen.  AIC is headquartered in Lebanon, exposing its operations to heightened levels of economic and political risk. This risk is partially offset by AIC’s diversification in both revenue streams and investment holdings outside of Lebanon.  Positive rating movement is unlikely at present. A reduction in risk-adjusted capitalisation, deterioration in financial performance or an increase in economic and political risks in AIC’s key markets would add negative pressure to the ratings.  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.  This rating announcement has been issued by A.M. Best Europe – Rating Services Limited, which 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 © 2014 by A.M. Best Company, Inc. ALL RIGHTS RESERVED.  Contact:  A.M. Best Company Michael Dunckley, +(44) 20 7397 0321 Associate Financial Analyst michael.dunckley@ambest.com or Mahesh Mistry, +(44) 20 7397 0325 Director, Analytics mahesh.mistry@ambest.com or Rachelle Morrow, +(1) 908 439 2200, ext. 5378 Senior Manager, Public Relations rachelle.morrow@ambest.com or Jim Peavy, +(1) 908 439 2200, ext. 5644 Assistant Vice President, Public Relations james.peavy@ambest.com  
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