AM Best has affirmed the Financial Strength Rating of B++ (Good) and the Long-Term Issuer Credit Rating of “bbb+” (Good) for the Arab War Risks Insurance Syndicate (AWRIS), based in Bahrain. The outlook for both ratings remains stable.
Key Drivers Behind the Affirmation
Balance Sheet Strength
AWRIS’ balance sheet strength is assessed as very strong, supported by:
- Risk-adjusted capitalisation exceeding the threshold for the strongest assessment under AM Best’s Capital Adequacy Ratio (BCAR).
- A conservative investment strategy, low net underwriting leverage, and prudent reserving practices.
- Strong retrocession coverage, which provides capacity for members and mitigates volatility from large losses.
AM Best notes that the syndicate’s dependence on retrocession coverage is offset by its robust underwriting profitability and solid relationships with multiple reinsurance counterparties, minimizing the risk of non-renewal. However, as a syndicate comprising (re)insurance companies in the Middle East and North Africa (MENA) region, the permanence of capital remains a key risk factor.
Strong Operating Performance
AWRIS has consistently delivered strong operating performance, as reflected in:
- A five-year average combined ratio of 65.7% (2019–2023), underpinned by low loss ratios averaging 2.0% over the same period.
- A return-on-equity (ROE) of 6.0%, considered strong given its high level of capitalisation.
The syndicate’s profitability is driven by disciplined underwriting and low loss frequency in its marine war risks portfolio.
Business Profile
AWRIS holds a niche position as a leading underwriter of marine war risks for its MENA-based members. While its focus on a single line of business is a limiting factor, the syndicate is gradually diversifying its offerings with support from reinsurance partners.
The syndicate benefits from a broad and growing membership base, with no undue reliance on any single member for premium income. However, its operations still depend heavily on sustained membership participation.
