LONDON: A.M. Best Europe – Rating Services Limited has affirmed the financial strength rating of A- (Excellent) and issuer credit rating (ICR) of “a-” of Trust International Insurance & Reinsurance Company B.S.C. (c) Trust Re (Trust Re) (Bahrain). The outlook for both ratings is stable.

The ratings reflect Trust Re’s adequate risk-adjusted capitalisation,resilient operating performance and developing business profile.

Trust Re’s risk-adjusted capitalisation has been decreasing in the last two years, negatively impacted by its strong business growth and increased retention level, and A.M. Best only considers it as adequate for the current rating level. However, A.M. Best considers that Trust Reactively manages its capital position and expects the company to take appropriate actions in 2012 and 2013 to restore its risk-adjusted capitalisation to a comfortable level whilst ensuring a more efficient utilisation of capital to support its changing profile. Trust Re’s management is proactively looking at measures to improve capital efficiency, and the steps taken in 2011 to de-risk the company’s investment portfolio are expected to continue in the next two years.

Trust Re published resilient consolidated technical results of USD 9.5 million in 2011, having been hit by industry major losses. Trust Re’s underwriting results are underpinned by a good loss ratio, with a five-year average below 65% despite the peak of 70% recorded in 2011, with a strong performance on its core facultative book, including energy (offshore and onshore) and property risks. Prospectively, the combined ratio is likely to remain at approximately 93%. A significant driver is the sound reserving policy and disciplined underwriting, which entails lower volatility of future earnings. Moreover, the company is supported by a stable expense ratio of around 26% and steady returns on investments between 4% and 6%, benefiting from Trust Underwriting Limited, which is viewed as a strategic investment by the company, allowing exposure to the Lloyd’s market.

Furthermore, Trust Re has a good developing business profile as a specialist underwriter of energy and property reinsurance in the Arab,Afro-Asian, Eastern European and Russian markets.

In A.M. Best’s opinion, Trust Re has improved its enterprise risk management process, and A.M. Best expects further development of the framework to be made. A.M. Best recognizes the measures taken by Trust Re and views the company’s risk management above par for the region.