AM Best has downgraded the ratings of Saudi Arabian Insurance Company (Damana) after the Bahrain-headquartered reinsurer failed to file its audited financial statements for 2020.

Damana

The downgrade sees Damana’s financial strength rating lowered to B+ (Good) from B++ (Good) and its long-term issuer credit rating lowered to “bbb-” (Good) from “bbb” (Good).

AM Best has placed these ratings under review with negative implications.

The rating downgrades reflect AM Best’s revised assessment of Damana’s ERM capabilities and governance framework.

AM Best noted that Damana has not yet released audited financial statements for 2020, creating concern over governance and internal controls.

The ratings agency said it is closely monitoring the situation as the company seeks to remove the uncertainty around liquidity and risk-adjusted capitalisation, while working with its auditors for the release of the 2020 financial statements.

It raised concerns regarding the company’s ability to effectively manage its investment and liquidity risk, and the resulting implications for risk-adjusted capitalisation. 

Despite this, the ratings agency said the ratings reflect Damana’s balance sheet strength, which AM Best assesses as very strong, as well as its “marginal” operating performance, limited business profile and marginal enterprise risk management.