Standard & Poor's Ratings Services said today that it raised its long-term counterparty credit and insurer financial strength ratings on Bahrain-based non-life reinsurer Trust International Insurance & Reinsurance Co. B.S.C.(c) Trust Re, the core operating entity of Trust Re Group (the group), to 'BBB+' from 'BBB'. The outlook is stable.
"The upgrade reflects the continued positive development of the group," said Standard & Poor's credit analyst Nigel Bond. "We believe the group demonstrates strong capitalization, strong operating performance, and a good competitive position," Mr. Bond added. Its highly concentrated investments and its high dependence on reinsurance temper these positive factors.
Although small by global standards, the company is a long-established and well-known reinsurer in the Middle East with a rapidly increasing presence in Asia and Africa. It has grown quickly (and profitably) over the last five years, reflecting its geographic expansion, higher capacity, growth in its primary insurance markets, and improved market acceptance. Nevertheless, Trust Re faces increasing competitive pressure and lower levels of economic and therefore insurable activity. Furthermore, we view its high, albeit declining, dependence on reinsurance as a weakness.
"We expect that Trust Re Group's long-term underwriting performance will remain profitable, that its capital adequacy will remain at least strong in the absence of further significant equity market volatility, and that the company's use of reinsurance will continue to diminish," Mr. Bond said. The group's investment risk profile is not expected to change significantly.
Positive rating actions are unlikely over the rating horizon. Negative rating actions may be taken if underwriting performance or capital adequacy deteriorates beyond expectations.
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