SALAMA Group gets BBB+ confidence from S&P

At the same time, the existing ratings on the 100% owned, Tunis-based reinsurance subsidiary, BEST Reinsurance Co. (BEST Re), were raised from BBB (Positive) to BBB+ (Stable).

S&P have expressed, by assigning an investment grade rating, confidence in the SALAMA Group, its prospects for the future, and its management team. The management team is headed by Dr. Saleh J. Malaikah, vice chairman and CEO.

The SALAMA Group, beside BEST Re, includes subsidiaries in the Kingdom of Saudi Arabia, Algeria, Senegal, and Egypt, who all benefit from the rating of the parent.

The S&P rating also reflects the Group's strong capitalization. With adjusted tangible net assets equivalent to USD 300 million, the solvency ratio to net premiums of USD155 million is very strong at over 190%, while risk-based capital adequacy modeling suggests extremely strong capitalization. Given the group's ambitions for growth and acquisition, prospective capitalization is expected to remain strong relative to risks and exposure.

In addition, the S&P rating reflects the groups good competitive position. At present, some 75% of the group's premium income is derived through the already rated, successful, explicitly Shari'ah compliant re-takaful reinsurance subsidiary, BEST Re. The reinsurer essentially underwrites retail quota share business in over 70 countries. SALAMA/IAIC also benefits from its own retail insurance activities in the United Arab Emirates, as well as from those of primary operating subsidiaries in the Kingdom of Saudi Arabia, Algeria, Senegal, and Egypt. Although the group principally writes general, non-life business it is also steadily developing its life and health activities.

The strong operating performance was also noted by S&P and was among the factors for the high rating. With a consolidated net combined ratio of 82% in 2006 and 86% in 2005, underwriting performance and prospects are both strong, while return on revenue is impressive and consistent at around 20%. Sources of income remain somewhat concentrated, however, with 20% of 2006 net income of USD49.4 million generated by BEST Re, and the balance essentially from the investment activities of the parent company. Other group operations all performed well but their combined profit contribution of less than USD 2.0 million was modest in absolute terms.

The S&P rating comes as a confirmation of a rating from A.M. Best Co., which has assigned a financial strength rating of B++ (Good) and an issuer credit rating of "bbb+".

These two ratings indicate the financial strength and credit worthiness of SALAMA Group and its subsidiaries, namely Saudi IAIC, BEST Re of Tunisia, TARIIC of Bahrain, ESIH of Egypt, SALAMA of Algeria and SALAMA of Senegal who all benefit from the group's credit and financial strength umbrella.