On Feb. 21, 2011, we lowered the ratings on the Kingdom of Bahrain to 'A-/A-2' and placed them on CreditWatch with negative implications.

As a result, we are placing our 'BBB' ratings on Takaful International Co. BSC on CreditWatch with negative implications.

We aim to resolve the CreditWatch listing on Takaful within the next three months, pending a resolution of the CreditWatch listing on Bahrain.

DUBAI, February 24, 2011--Standard & Poor's Ratings Services placed its 'BBB' long-term counterparty credit and insurer financial strength ratings on Bahrain-based insurer Takaful International Co. BSC on CreditWatch with negative implications.

This rating action follows the recent downgrade of the long-term local currency sovereign rating on the Kingdom of Bahrain. Under our ratings criteria, sovereign risk is a key factor influencing the financial strength of insurers. As a result, the vast majority of insurers are rated no higher than the relevant sovereign local currency rating. Consequently, we have placed the ratings on Takaful International on CreditWatch with negative implications to reflect the increase in sovereign-related risk.

The majority of Takaful International's premium emanates from Bahrain and most of its invested assets are held in the Kingdom. Therefore, its business and financial profile is affected by movements in the sovereign rating. Standard & Poor's aims to resolve the CreditWatch listing on Takaful International within the next three months, pending a resolution of the CreditWatch listing on Bahrain.

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RELATED CRITERIA AND RESEARCH
All articles listed below are available on RatingsDirect on the Global Credit Portal, unless otherwise stated:
Kingdom of Bahrain Ratings Lowered By One Notch To 'A-/A-2'; On Heightened Political Risk; On CreditWatch Negative, Feb. 21, 2011

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