NU Online News Service, Feb. 28, 2:39 p.m. EST
Standard & Poor's lowered the insurer financial strength rating of three Bahraini insurers while affirming the financial strength of three others domiciled there after lowering the sovereign rating of the kingdom of Bahrain.
Last week, S&P lowered the Kingdom of Bahrain's rating one notch to "A-minus/A-2," reflecting the rating agency's reappraisal of political risk there.
Today, S&P said it placed on credit watch with negative implications the insurer financial strength of Bahrain National Insurance Co. BSC (BNI), Bahrain Kuwait Insurance Co. BSC (BKIC) and Takaful International Co. BSC.
Three other insurers based in Bahrain—Hannover ReTakaful BSC., Trust International Insurance & Reinsurance Co. BSC and Saudi National Insurance Co. (SNCI)—had their insurer financial strength ratings affirmed with stable outlook.
Hannover ReTakaful, Trust Re and SNCI have limited exposure to business in Bahrain, S&P said, and the choice of Bahrain as a domicile stems from its role as a financial center. The rating service added that it felt the three companies could operate elsewhere "with limited or no disruption to business" if they needed to.
On the other hand, the other three—BNI, BKIC and Takaful International—depend on the kingdom for the majority of their premium. The companies also have most of their invested assets in the kingdom, S&P noted.
S&P said the current situation in Bahrain is having a negative impact on the insurers as uncertainty remains about the kingdom's future.
The action comes in the face of continued political turmoil there and throughout the Middle East. Earlier this month, demonstrators sought changes to the monarchy that is dominated by minority Sunni in a country that is 70 percent Shia. The two are the major religious sects of Islam.
The ruling family initially tried to put the demonstrations down with violence but has since relented. Today, reports said demonstrators kept members of the kingdom's parliament from getting inside.
S&P said it aims to resolve the credit watch placements on BNI, BKIC and Takaful International "within the next three months, pending the resolution of the credit watch on Bahrain."
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