AM Best has assigned a financial strength rating of B++ (Good) and a long-term issuer credit rating of “bbb+” (Good) to UAE-domiciled Ma’aden Re (MRE).
MRE is a captive reinsurer of Saudi Arabian Mining Company (Ma’aden). The outlook assigned to these Credit Ratings (ratings) is stable.
The captive currently only writes property damage and business interruption reinsurance, and its risks are concentrated in Saudi Arabia.
MRE is a newly formed captive, established in November 2021, which completed its first full year of operations in 2022 and has a limited performance track record.
The captive’s profitability in 2022 was materially impacted by two large claims, which exhausted its aggregate yearly limits and resulted in the combined ratio of 175.9% for the year.
MRE’s profitability is projected to improve materially in 2023 and to remain supportive of an adequate assessment over the cycle.
The ratings reflect MRE’s balance sheet strength, which AM Best assesses as very strong, as well as its adequate operating performance, limited business profile and appropriate enterprise risk management.
MRE’s very strong balance sheet strength assessment is underpinned by its risk-adjusted capitalisation at the strongest level, as measured by Best’s capital adequacy ratio (BCAR).
AM Best expects MRE’s risk-adjusted capitalisation to remain at the strongest level, supported by the captive’s moderate underwriting exposure, low asset risk profile and the good credit quality of its retrocession programme.
Partly offsetting factors in the balance sheet strength assessment are the captive’s dependence on reinsurance and its concentration of assets in Saudi Arabia.