LONDON--()--AM Best has affirmed the Financial Strength Rating of B++ (Good) and the Long-Term Issuer Credit Rating of bbb+ (Good) of Arab War Risks Insurance Syndicate (AWRIS) (Bahrain). The outlook of these Credit Ratings (ratings) is stable.

The ratings reflect AWRIS balance sheet strength, which AM Best assesses as very strong, as well as its strong operating performance, limited business profile and appropriate enterprise risk management.

AWRIS balance sheet strength is underpinned by its risk-adjusted capitalisation, which is comfortably in excess of the threshold required for the strongest assessment, as measured by Bests Capital Adequacy Ratio (BCAR). The syndicates balance sheet strength assessment benefits from a relatively conservative investment strategy, low net underwriting leverage and prudent reserving practices. AM Best considers AWRIS to have a very high dependence on retrocession coverage in order to provide capacity to members and manage potential volatility from large losses. Due to the companys track record of robust underwriting profitability, combined with strong relationships with multiple reinsurance counterparties, the risk of non-renewal of the reinsurance programme is limited. Given the nature of AWRIS operations and membership structure as a syndicate of (re)insurance companies in the Middle East and North Africa (MENA) region, risks associated with the permanence of capital is a further offsetting factor.

AWRIS has a track record of strong operating performance, demonstrated by a five-year (2019-2023) weighted average combined ratio of 65.7% and a five-year return-on-equity ratio (ROE) of 6.0%. AWRIS underwriting performance has been supported by low loss ratios, demonstrated by a five-year weighted average loss ratio of 2.0%. The syndicates ROE metrics are considered supportive of the strong operating performance assessment given its high level of capitalisation.

AWRIS has an established position as a niche underwriter of marine war risks across the MENA region for its members. As a niche operator, AM Best views the syndicates concentration by line of business as an offsetting factor, albeit the syndicate is starting to expand its product offering with the support of reinsurance partners. There is limited dependence on any single member with regard to premium income, and the syndicate has seen some growth in members in recent years. Nevertheless, there remains a reliance on continued membership participation.

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