AM Best has affirmed the Financial Strength Rating of B++ (Good) and the Long-Term Issuer Credit Rating of 'bbb+' (Good) of Solidarity Bahrain B.S.C. (Solidarity Bahrain) (Bahrain).

The outlook of these Credit Ratings (ratings) is stable.

The ratings reflect Solidarity Bahrain'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, Solidarity Bahrain's strategic importance to its parent company, Solidarity Group Holding BSC (SGH), a leading provider of Islamic insurance solutions in Bahrain and Jordan.

Solidarity Bahrain'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 domestic regulation and requirement that the shareholders' fund would have to support the policyholders' fund. AM Best expects the company's prospective risk-adjusted capitalisation to remain comfortably above the minimum required for the strongest assessment following the acquisition and merger of Al Hilal Life B.S.C. (Al Hilal), which is scheduled to close before year-end 2023. Solidarity Bahrain's balance sheet strength benefits from good liquidity and financial flexibility. Partially offsetting these positive factors are the company's dependence on third-party reinsurance and its concentration of assets in Bahrain and the Gulf Cooperation Council, which have the potential to introduce volatility into Solidarity Bahrain's capital base.

The company has a track record of adequate operating profitability, supported by good technical earnings, as evidenced by a five-year (2018-2022) weighted average combined ratio of 94.8%, and moderate investment income. In 2022, Solidarity Bahrain reported a combined ratio of 94.1% (2021: 91.3%), with the increase being in part driven by the consolidation of T'Azur Company B.S.C. 's underwriting portfolio within Solidarity Bahrain's in January 2022. The company is expected to continue to achieve adequate operating results in the medium term as it continues to grow and integrate Al Hilal, while focusing on technical discipline.

Solidarity Bahrain is a leading insurer in Bahrain, with gross written contributions of BHD 46.2 million (USD 123.4 million) in 2022. The merger with Al Hilal is expected to strengthen Solidarity Bahrain's position in the domestic market, enhance its product diversification by expanding its life segment and moderately increase its geographical diversification via Al Hilal's Kuwaiti operations. However, Solidarity Bahrain's concentration in Bahrain's highly competitive and small insurance market remains an offsetting factor in its business profile assessment.

This press release relates to Credit Ratings that have been published on AM Best's website. For all rating information relating to the release and pertinent disclosures, including details of the office responsible for issuing each of the individual ratings referenced in this release, please see AM Best's Recent Rating Activity web page. For additional information regarding the use and limitations of Credit Rating opinions, please view Guide to Best's Credit Ratings. For information on the proper use of Best's Credit Ratings, Best's Performance Assessments, Best's Preliminary Credit Assessments and AM Best press releases, please view Guide to Proper Use of Best's Ratings & Assessments.

AM Best is a global credit rating agency, news publisher and data analytics provider specialising in the insurance industry. Headquartered in the United States, the company does business in over 100 countries with regional offices in London, Amsterdam, Dubai, Hong Kong, Singapore and Mexico City.

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