LONDON--(BUSINESS WIRE)--AM Best has affirmed the Financial Strength Rating of A (Excellent) and the Long-Term Issuer Credit Ratings of “a” of Gulf Insurance Group K.S.C.P. (GIG) and its subsidiary, Gulf Insurance and Reinsurance Company K.S.C. (Closed) (gig-Kuwait) (both domiciled in Kuwait). The outlook of these Credit Ratings (ratings) is negative.
The ratings reflect GIG’s balance sheet strength, which AM Best categorises as very strong, as well as its strong operating performance, neutral business profile and appropriate enterprise risk management.
gig-Kuwait is a composite insurer with a leading position in Kuwait’s insurance market. The company is strategically important to GIG and strongly integrated into its operations.
The negative outlooks reflect a recent adverse trend in the group’s balance sheet strength. While internal capital generation and the sale of treasury shares led to an improvement in the group’s Best’s Capital Adequacy Ratio (BCAR) score and a reduction in financial leverage during 2019, and the company expects further positive development in 2020, concerns remain around volatility arising from subsidiaries domiciled in higher risk countries and liquidity pressures arising from a sizable single medical contract in Kuwait.
GIG’s balance sheet benefits from a comprehensive reinsurance programme supported by well-rated counterparties, along with the group’s relatively conservative investment strategy.
GIG is amongst the largest and most diversified insurance groups in the Middle East and North Africa region, with market leading positions in Kuwait, Jordan and Bahrain, and a strong footprint in Egypt, Turkey and Algeria. The group has demonstrated a track record of strong operating performance, returning a five-year (2015-2019) average return on equity of 13%, despite extraordinary accounting adjustments deflating net profits in 2016 and 2017. GIG’s earnings are supported by solid investment returns and a five-year (2015-2019) average combined ratio of 96.6%.
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