Operating performance assessment of Bahrain-based Gulf Insurance Group (Gulf) [GIG Gulf] considers the company's history of strong overall profitability, underpinned by robust underwriting performance says AM Best.
In 2023, GIG Gulf reported a post-tax profit of BHD17.7m ($47.2m), translating to a return on equity of 11.6%. Historically, the company’s earnings have been supported through both investment and underwriting returns, which was demonstrated again in 2023, with an investment income of BHD12.6m supporting underwriting profits.
GIG Gulf’s underwriting discipline was demonstrated in 2023 and the first six months of 2024, when the company focused on higher-margin products and actively moved away from poorly performing business.
Ratings upgraded
AM Best has upgraded GIG Gulf’s Long-Term Issuer Credit Rating (Long-Term ICR) to ‘a+’ (Excellent) from ‘a’ (Excellent) and affirmed the insurer’s Financial Strength Rating of ‘A‘ (Excellent). The outlook of these credit ratings is ‘Stable’.
The ratings reflect GIG Gulf’s balance sheet strength, which AM Best assesses as very strong, as well as its strong operating performance, neutral business profile, and appropriate enterprise risk management (ERM).
The Long-Term ICR upgrade reflects AM Best’s recognition of implicit support provided to GIG Gulf by its parent, Kuwait-headquartered Gulf Insurance Group (GIG). GIG Gulf’s ratings benefit from the favourable financial flexibility and capital resources of its parent company. In addition, GIG Gulf benefits from shared resources including ERM, actuarial, investment management, and other less quantifiable benefits, such as best practices and capital management.
GIG Gulf’s balance sheet strength assessment reflects its risk-adjusted capitalisation, which was comfortably at the strongest level at year-end 2023, as measured by Best’s Capital Adequacy Ratio (BCAR). A conservative asset allocation, low reliance on reinsurance, and prudent reserving practices further support the company’s balance sheet.
Business profile
GIG Gulf’s business profile assessment reflects its established position, commanding a Top Five position within each of its core markets: the United Arab Emirates, Bahrain, and Oman. Additionally, the company has a 50% ownership stake in Gulf Insurance Group (a Saudi joint stock company) in Saudi Arabia.
GIG Gulf’s assessment also reflects its moderate level of diversification by geography and line of business, which has remained following its successful rebranding and integration into GIG. AM Best considers the company’s risk management capabilities to be relatively sophisticated.