MedGulf Bahrain’s rating cut on Saudi losses: S&P

Standard & Poor’s Ratings Services (S&P) has lowered Mediterranean & Gulf Insurance & Reinsurance Co.’s (MedGulf Bahrain) long-term insurer financial strength and counterparty credit rating to A- from A with a stable outlook, the rating agency said in a research note.

The revision was due to significant losses and weak capital of its Saudi affiliate Mediterranean & Gulf Cooperative Insurance & Reinsurance Co. (MedGulf KSA).

S&P also lowered MedGulf KSA’s credit rating to BBB+ from A-, while the insurer’s outlook was set at stable. The Saudi affiliate’s GCC regional scale rating was cut to gcAA+ from gcAAA and the Bahrain-based insurer’s regional rating was affirmed at gcAAA.

‘’Although the group's key Saudi operation reported a reasonable profit for  the third quarter, we do not believe that prospective group earnings will be sufficient to sustainably restore its depleted risk-based capital to very strong levels by year-end 2017,’’ S&P said.

The stable outlook reflects the likelihood that group will see its earnings stabilize over the next two years.

The group’s rating could be lowered in the future if  the company sees a decline in risk-based capital, fails to sustain a strong underwriting performance, or incurs additional losses, the statement said, adding that the ratings agency does not expect to raise the insurer’s rating over the next two years.