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 that is assessed at the strongest level, as measured by Best’s Capital Adequacy Ratio (BCAR). 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.

The company has a track record of strong operating performance supported by robust underwriting results from both non-life and life portfolios over the past five years. In 2023, under IFRS 17, KIC generated a non-life net-net combined ratio of 75.8% (as calculated by AM Best). KIC’s strong operating performance assessment is demonstrated by a return-on-equity ratio of 8.8% in 2023, with earnings over the past five-year period supported both by the company’s underwriting and investment results. Investment performance supplements overall earnings; however, it introduces some earnings volatility, with an adjusted return on assets ranging from 4.8% to 9.3% over a five-year period (2019-2023). KIC reported pre-tax profits of KWD 12.3 million in 2023, displaying growth in line with historic levels. The company’s 2022 pre-tax profits of KWD 46.2 million were principally driven by a one-off positive investment return from the disposal of a single equity holding.

KIC holds a well-established position within its domestic insurance market of Kuwait, from which it sources all its premium. In 2023, KIC generated insurance revenue of KWD 53.8 million (USD 175.4 million), compared with KWD 50.7 million in 2022 (USD 166.0 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 completed the acquisition of a domestic takaful company, National Takaful Insurance Company K.S.C. (closed), allowing continued operation in the takaful 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.

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