LONDON, Aug 28, 2015 (BUSINESS WIRE) —
A.M. Best has downgraded the financial strength rating (FSR) to
B++ (Good) from A- (Excellent) and the issuer credit rating (ICR) to
“bbb+” from “a-” of The Mediterranean Gulf Insurance Reinsurance
Company (Medgulf) B.S.C. (c) (Medgulf Bahrain) (Bahrain) and The
Mediterranean and Gulf Cooperative Insurance and Reinsurance Company (A
Saudi Joint Stock Company) (Medgulf KSA) (Saudi Arabia).
Concurrently, A.M. Best has affirmed the FSR of B++ (Good) and the ICR
of “bbb+” of The Mediterranean Gulf Insurance and Reinsurance
Company S.A.L. (MEDGULF) (Medgulf Lebanon) (Lebanon). The
outlook on the FSRs and ICRs for Medgulf Bahrain and Medgulf Lebanon all
remain stable. The outlook for the ICR for Medgulf KSA has been revised
to negative from stable, while the outlook for the FSR remains stable.

The rating downgrades to Medgulf Bahrain and Medgulf KSA reflect
deterioration in the capital position at both of these entities. This
follows reserve strengthening at Medgulf KSA, which has led to a
material underwriting loss recorded in the first half of 2015. In
addition, risk-adjusted capitalisation at both of these entities has
trended downwards over the past two years due to adverse reserve
development booked in 2013, following a regulatory shift in reserving
practices, coupled with elevated levels of underwriting growth. Going
forward, it is A.M. Best’s expectation that Medgulf Bahrain will look to
rebuild its capital position through strong retained earnings and
controlled growth in underwriting. However, Medgulf KSA’s standalone
risk-adjusted capitalisation is expected to remain weak with any further
deterioration in capital adequacy likely to drive downward pressure on
the current ratings.

The rating affirmations on Medgulf Lebanon reflect the company’s market
leading position in Lebanon, its solid level of risk-adjusted
capitalisation and its improving technical performance. The company has
reported better than budgeted half year 2015 results.

The ratings of all Medgulf entities continue to benefit from the
financial strength of the group. The ratings of Medgulf KSA and Medgulf
Lebanon benefit from rating enhancement from Medgulf Bahrain, reflecting
their strategic importance to the group. The ratings of the subsidiaries
may be affected by a change in the standalone rating fundamentals of the
companies or A.M. Best’s view of their strategic importance to the group.

In accordance with Regulation (EC) No. 1060/2009, the following is a
link to required disclosures:
A.M.
Best Europe – Rating Services Limited Supplementary Disclosure.

This press release relates to rating(s) that have been published on
A.M. Best’s website.
For all rating information relating to the
release and pertinent disclosures, including details of the office
responsible for issuing each of the individual ratings referenced in
this release, please visit A.M. Best’s

Ratings
Criteria Center

.

A.M. Best Company is the world’s oldest and most authoritative
insurance rating and information source. For more information, visit
www.ambest.com.

Copyright © 2015 by A.M. Best Company, Inc. ALL RIGHTS RESERVED.

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SOURCE: A.M. Best Company

A.M. Best Company

Myles Gould

Financial
Analyst

+(44) 20 7397 0267

myles.gould@ambest.com

or

Mahesh
Mistry

Director, Analytics

+(44) 20 7397 0325

mahesh.mistry@ambest.com

or

Christopher
Sharkey

Manager, Public Relations

+(1) 908 439
2200, ext. 5159

christopher.sharkey@ambest.com

or

Jim
Peavy

Assistant Vice President, Public Relations

+(1)
908 439 2200, ext. 5644

james.peavy@ambest.com

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