Arab Reinsurance Company (Arab Re) has signed an agreement to sell its material land holding in Lebanon, with the transaction expected to be completed by December 2028, noted AM Best.
In the global credit rating agency’s view, the sale of this land, which comprised 17% of Arab Re’s total investments at the end of 2024, will materially reduce the company’s asset risk and significantly benefit its risk-adjusted capitalisation over the medium term, as measured by Best’s Capital Adequacy Ratio (BCAR).
“This disposal should also contribute to further insulating Arab Re from the challenging economic and political conditions in Lebanon,” said AM Best.
Consequently, the agency has revised the outlook to positive from stable for the Long-Term Issuer Credit Rating (Long-Term ICR) and affirmed the Financial Strength Rating (FSR) of ‘B’ (Fair) and the Long-Term ICR of ‘bb’ (Fair) of Arab Reinsurance Company (Arab Re). The outlook of the FSR is stable.
These credit ratings reflect Arab Re’s balance sheet strength, which AM Best assesses as strong, as well as its adequate operating performance, limited business profile and marginal enterprise risk management (ERM).
“The revision of the Long-Term ICR outlook reflects positive pressures across Arab Re’s balance sheet strength and ERM assessments following the decision by the company’s management to de-risk its investment portfolio,” said AM Best.