BEIRUT: AM Best has placed under review with negative implications the Financial Strength Rating of B+ (Good) and the Long-Term Issuer Credit Rating of “bbb-” of Lebanon based Al Ittihad Al Watani (L’Union Nationale) Société Générale D’Assurances du Proche Orient, sal.
These Credit Rating actions reflect the increased social, political and economic instability in Lebanon. In October 2019, demonstrations spread across the country, rapidly leading to the resignation of the government. Since then, political and economic uncertainty has increased significantly, with a slowdown in capital inflows causing, in some instances, cash flow constraints to the economy.
Al Ittihad originates all of its business and holds most of its investments in the United Arab Emirates. However, it has some exposure to the heightened risk in Lebanon as it is its country of domicile. Furthermore, Al Ittihad’s ratings factor in some rating enhancement from its sister company, Bankers Assurance S.A.L. (Bankers).
The ratings of Bankers were downgraded and placed under review with negative implications on 9 December 2019 as a result of the structural market issues stemming from the increased social, political and economic instability in Lebanon, which weaken its balance sheet strength.
AM Best will monitor how events unfold in Lebanon and aim to resolve the under review status once there is more clarity as to the impact of these events on the credit profile of Al Ittihad and its sister company, Bankers.