AM Best has affirmed the Financial Strength Rating of B++ (Good) and the Long-Term Issuer Credit Rating of “bbb+” (Good) of Ma’aden Re Limited (MRE) (United Arab Emirates), a captive reinsurer of Saudi Arabian Mining Company (Ma’aden) (Saudi Arabia). The outlook of these Credit Ratings (ratings) is stable.

The ratings reflect MRE’s balance sheet strength, which AM Best assesses as strong, as well as its adequate operating performance, limited business profile and appropriate enterprise risk management. The ratings also reflect, in the form of rating enhancement, MRE’s strategic importance to its parent, Ma’aden.

MRE’s strong balance sheet strength assessment is underpinned by robust risk-adjusted capitalisation, moderate underwriting exposure, low asset risk profile and the good credit quality of its retrocession programme. Partly offsetting to the balance sheet strength assessment is the captive’s high dependence on retrocession, particularly following the increase of its risk limit, which elevates credit risk under a stressed scenario.

MRE is a single-parent captive, domiciled in the Dubai International Financial Centre, established in November 2021. The captive underwrites Ma’aden’s whole property damage and business interruption reinsurance programme and is expected to expand into additional lines over the coming years. MRE’s risks are concentrated to Saudi Arabia, where the majority of its parent’s assets are located.

MRE generated its first profit in 2023, its second full year of operation, reporting a solid pre-tax profit of USD 13.6 million (2022: USD -4.1 million). The captive’s 2023 profit was driven by strong technical profitability, which was the result of a benign loss year, and modest investment income. Performance contrasted with the first year of operation, in 2022, which was impacted materially by two large claims that exhausted its aggregate yearly limits and resulted in the combined ratio of 175.9%. MRE’s is projected to generate a profitable return in 2024 and over the planned period, remaining supportive of an adequate assessment.

AM Best remains the leading rating agency of alternative risk transfer entities, with more than 200 such vehicles rated throughout the world. For current Best’s Credit Ratings and independent data on the captive and alternative risk transfer insurance market, please visit www.ambest.com/captive.

This press release relates to Credit Ratings that have been published on AM Best’s website. For all rating information relating to the release and pertinent disclosures, including details of the office responsible for issuing each of the individual ratings referenced in this release, please see AM Best’s Recent Rating Activity web page. For additional information regarding the use and limitations of Credit Rating opinions, please view Guide to Best’s Credit Ratings. For information on the proper use of Best’s Credit Ratings, Best’s Performance Assessments, Best’s Preliminary Credit Assessments and AM Best press releases, please view Guide to Proper Use of Best’s Ratings & Assessments.

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