Buruj Cooperative Insurance Company announced that Moody's Investors Service has placed the company's Financial Insurance Strength Rating (IFSR) into the (Baa2) category, while changing its outlook for the company from Stable to under review towards reduction.
The company said in a statement to the Saudi Market (Tadawul), today, Wednesday, that the review of the rating towards reduction reflects the risks of governance and the decline of the company's activities and profits.
In spite of the decrease in the total written premiums, which led to a decrease in the strength of the previous profitability of the company, Moody's confirmed that the level of capital, technical insurance reserves and the company's liquidity reserves remain strong and sufficient To absorb the decline in profitability for a few months.
The agency also indicated that the company's board of directors was positively active to ensure that the company continues to operate normally in the area of customer service and claims.
With the rating being downgraded, the rating process is limited. Moody's can confirm the rating and the current rating level if it becomes clear that management measures are sufficient to increase the company's activities and profitability in the next six months.
In return, Borouge will be downgraded if there is a significant and continuous decline in its market share; Or a decrease in the capital position, with a significant decrease in the regulatory capital or an increase in the total underwriting leverage of more than 3 times or poor credit quality of reinsurers.
The company can also be downgraded if underwriting performance occurs continuously, with a combined ratio (COR) of 100% or more for the next two quarters; Or lower quality of invested assets with high risk assets (HRA) equivalent to more than 100% of consolidated equity (shareholders and policyholders).
