Kuwait, December 12, 2010: Capital Standards Rating Co. (CSR) today assigned a long-term issuer rating of 'BBB' and a National rating of 'Akw' to Kuwait Investment Company (S.A.K). The outlook for the rating is negative. This is the first time that CSR rates Kuwait Investment Company (KIC).

The issuer rating reflects the high probability that KIC would be supported by Kuwait Investment Authority (KIA), its major shareholder, should the need arise. KIA is the sovereign wealth fund of the State of Kuwait and has a 76.2% stake in KIC. The stand-alone rating BB reflects KIC's strong brand recognition in Kuwait and the company's financial flexibility which is supported by institutional deposits. However, this rating is significantly constrained given the limited diversification of KIC's business model. The rating is also constrained by KIC's significant market risk exposure and a substantial mismatch between the asset and liability maturities.

KIC is one of the largest asset managers in Kuwait with assets under management (AUM) amounting to KWD 2.5 bn as of December 2009. In the last two years, KIC's financial performance was significantly impacted by the financial crisis, exposing the risk in the company's business model. CSR believes that with the current business model, KIC's profitability is likely to remain volatile and constrained in the current economic environment.

KIC holds an 'investment banking" license, and therefore is the only listed investment company in Kuwait which can accept institutional deposits. While this significantly adds to the financial flexibility of the company, the short term nature of the institutional deposits remains a concern. In addition, KIC's investment portfolio is primarily longer term in nature resulting in maturity mismatches. Nevertheless, shareholder funding in the form of deposits significantly dominates KIC's deposit base, alleviating pressure on the company's funding structure.

After the global financial crisis, KIC is in the process of revising its investment strategy and upgrading its risk management systems to address key issues within asset management and investment activities. CSR believes that the company's new investment strategy to diversify market risk along with a renewed focus on risk management, could improve the company's rating potential

The outlook for KIC's rating is negative. This mainly reflects the unfavorable market and macro uncertainties which are likely to put downward pressure on KIC's revenues. It also reflects CSR's concern about the revenue volatility which is not expected to change significantly in the short term.

According to CSR's National rating scale, KIC's rating of 'Akw' reflects the standing of the company's credit worthiness relative to its domestic peers. CSR developed the National Rating Scale to facilitate the assessment of rated entities in the country, giving Kuwaiti and foreign investors a tool to make finer credit distinctions between local issuers.

The rating methodology used in rating KIC is "Asset Management Company Methodology", and it can be found at www.capstandards.com in the 'methodologies brief' sub-directory under the Rating tab.

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Kuwait Investment Company was established in 1961 as the first investment company in Kuwait. The company is primarily involved in asset management and investment activities. It is regulated by the Central Bank of Kuwait (CBK). The company was publicly listed in 1984 and is majority-owned by the Kuwait Investment Authority (KIA)
Contacts:
Ms. Victoria Monteiro,
Tel: +965 22258822, ext.514,
email - v.monteiro@capstandards.com;

Mr. Bader Al Bader,
Tel: +965 22258822, ext.517,
email - b.albader@capstandards.com
Additional information is available at www.capstandards.com

© Press Release 2010