Best’s News & Research Service - March 04, 2021 12:36 PM (EST)
AM Best Affirms Credit Ratings of Kuwait Insurance Company S.A.K.P.
- March 04, 2021 12:36 PM (EST)
London //BestWire// - AM Best has affirmed the Financial Strength Rating of A- (Excellent) and the Long-Term Issuer Credit Rating of “a-” 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 at the strongest level, as measured by Best’s Capital Adequacy Ratio (BCAR). Further support to the balance sheet strength assessment stems from KIC’s consistent internal capital generation and prudent reserving. Offsetting factors include KIC’s high dependence on reinsurance, although the associated counterparty risk is partially mitigated by the use of a reinsurance panel of strong credit quality. In addition, KIC’s capital position is exposed to potential volatility through the company’s high-risk investment strategy, with Gulf Cooperation Council equities accounting for a significant proportion of total assets.
KIC’s strong level of operating performance, demonstrated by a five-year average (2015-2019) return-on-equity ratio of 8.4%, is driven by the company’s solid technical results. Non-life underwriting profitability has been strong, with combined ratios below 85% in each of the past five years, and life operations have been a positive contributor to earnings, albeit moderate. Investment performance provides a significant and largely positive contribution to earnings with a five-year (2015-2019) net investment return (excluding gains and losses) of 3.8%. However, investment returns remain subject to volatility from regional equity market performance.
KIC holds a well-established position within its domestic insurance market, from which it sources all premium. The company has good product diversification, offering a comprehensive range of non-life, life and takaful products, and maintains a strong presence in corporate business lines, including general accident and property. In 2019, KIC generated gross written premiums of KD 37.6 million (USD 124.1 million), compared with KD 36.3 million in 2018. The business profile assessment remains constrained by the company’s geographic concentration and modest scale by international standards.
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 media use of Best’s Credit Ratings and AM Best press releases, please view Guide for Media - Proper Use of Best’s Credit Ratings and AM Best Rating Action Press Releases.
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.