Best’s News & Research Service - June 16, 2023 12:05 PM (EDT)
AM Best Affirms Credit Ratings of Kuwait Reinsurance Company K.S.C.P.
- June 16, 2023 12:05 PM (EDT)
London //BestWire// - AM Best has affirmed the Financial Strength Rating of A- (Excellent) and the Long-Term Issuer Credit Rating of “a-” (Excellent) of Kuwait Reinsurance Company K.S.C.P. (Kuwait Re) (Kuwait). The outlook of these Credit Ratings (ratings) is stable.
The ratings reflect Kuwait Re’s balance sheet strength, which AM Best assesses as very strong, as well as its adequate operating performance, neutral business profile and appropriate enterprise risk management. The ratings factor in no rating enhancement or drag arising from the company’s ownership by Al Ahleia Insurance Company S.A.K.P. (Al Ahleia).
Kuwait Re’s balance sheet strength is underpinned by its risk-adjusted capitalisation, which is assessed at the strongest level, as measured by Best’s Capital Adequacy Ratio (BCAR). Capital consumption under BCAR is predominantly driven by underwriting risks, due to the company’s high premium retention and generally conservative investment allocation. The company’s balance sheet strength is supported by a track record of internal capital generation, along with prudent reserving practices and sufficient liquidity to support operations. Partially offsetting factors include Kuwait Re’s holding of higher risk investments, including real estate, equating to approximately 14% of its total invested assets at year-end 2022, which exposes its capital base to potential volatility.
Kuwait Re has a track record of adequate operating performance. In 2022, the company reported net income of KWD 8.0 million (2021: KWD 6.3 million), which was equally generated by technical and non-technical operations. Kuwait Re’s operating performance has trended positively in recent years, and results for 2022 translated to a return-on-equity of 12.0% (2021: 10.5%), compared with the five-year (2018-2022) weighted average of 9.9%. Enhanced underwriting selection and discipline has resulted in solid underwriting performance, with the company reporting a five-year (2018-2022) weighted average combined ratio of 94.8%. The company’s technical results in recent years have outperformed historic averages, with increases in earned premium and continued robust loss ratio experience contributing to a combined ratio of 92.3% in both 2021 and 2022 (as calculated by AM Best).
Kuwait Re’s business profile assessment reflects its good diversification by geography and product offering. Operations span the Middle East, North Africa, Asia-Pacific and Central and Eastern Europe, where the company provides proportional and non-proportional cover to its cedants. Kuwait Re reported gross written premium of KWD 74.2 million in 2022, equivalent to USD 243.2 million, representing a combined (non-life & life) growth in premiums of 4% compared with 2021, driven in part by favourable reinsurance market conditions in its core markets.
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.