AM Best Affirms Credit Ratings of Kuwait Insurance Company S.A.K.P.

LONDON--(BUSINESS WIRE)--AM Best has affirmed the Financial Strength Rating of A- (Excellent) and the Long-Term Issuer Credit Rating of “a-” (Excellent) of Kuwait Insurance Company S.A.K.P. (KIC) (Kuwait). The outlook of these Credit Ratings (ratings) is stable.

The ratings reflect KIC’s balance sheet strength, which AM Best assesses as very strong, as well as its strong operating performance, limited business profile and appropriate enterprise risk management.

KIC’s balance sheet strength is underpinned by its risk-adjusted capitalisation, as measured by Best’s Capital Adequacy Ratio (BCAR), which is assessed at the strongest level. Further supporting the balance sheet strength assessment is KIC’s consistent internal capital generation and prudent reserving practices. Offsetting factors include KIC’s high-risk and concentrated investment portfolio, which exposes its capital position to potential volatility, and the company’s elevated dependence on reinsurance, although the associated counterparty risk is partially mitigated by the use of a panel of financially sound reinsurers.

KIC’s strong operating performance assessment is demonstrated by a five-year (2018-2022) weighted average return-on-equity ratio of 16.3%, with earnings over this period supported both by the company’s underwriting and investment results. KIC reported net profit after tax of KWD 42.1 million in 2022 (2021: KWD 11.4 million), with the year-on-year increase principally driven by a one-off positive investment return from the disposal of a single equity holding. KIC’s underwriting profitability continues to support overall earnings and it has generated positive returns in its non-life and life accounts over the past five years. The company’s non-life portfolio has historically driven overall underwriting performance and generated a five-year (2018-2022) weighted average combined ratio of 88.8%, as calculated by AM Best.

KIC holds a well-established position within its domestic insurance market of Kuwait, from which it sources all its premium. In 2022, KIC generated gross written premium of KWD 50.4 million (USD 165.2 million), compared with KWD 46.9 million in 2021 (USD 155.4 million). Although KIC’s profile is concentrated in Kuwait, it benefits from good product diversification, offering a comprehensive range of non-life, life and takaful products, and a strong presence in corporate business lines, including general accident and property. In 2023, KIC expects to complete the acquisition of a domestic takaful company allowing continued operation in the takaful market. KIC’s strategic plan continues to include geographic expansion, through establishing operations in Egypt’s life insurance market. Although projected to be at a small scale relative to its domestic business, KIC’s regional expansion presents additional operational and execution risks.

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.

AM Best is a global credit rating agency, news publisher and data analytics provider specialising in the insurance industry. Headquartered in the United States, the company does business in over 100 countries with regional offices in London, Amsterdam, Dubai, Hong Kong, Singapore and Mexico City. For more information, visit www.ambest.com.

Copyright © 2023 by A.M. Best Rating Services, Inc. and/or its affiliates. ALL RIGHTS RESERVED.