Moody's assigns Ba1 IFS rating to National Takaful Insurance Company; positive outlook

First-time rating assignment

London, 15 December 2011 -- Moody's has today assigned a Ba1 insurance financial strength rating (IFSR) to National Takaful Insurance Company (National Takaful), based in Kuwait. The rating outlook is positive.

RATINGS RATIONALE
National Takaful is one of the largest Takaful insurers in Kuwait and was established in 2003. It writes a broad mix of Takaful non-life, life, health and medical insurance. Moody's Ba1 rating reflects National Takaful's good position in the domestic Takaful market, with a top-two market share and a top-ten market share in the overall Kuwait insurance market, albeit with a market share of around 3%. Moody's notes that the new management team has significant experience and the broad shareholder base has remained supportive of the company.

However, offsetting this are a higher risk investment strategy, similar to other Takaful companies in the region, including a significant (KD3.5mn nominal value) Murabaha (Islamic loan) which is 75% impaired as at year-end 2010, together with significant real estate holdings, which accounted for around 50% of invested assets as at YE 2010. Furthermore, the company has recorded weak profitability in recent years, with a 2010 consolidated net loss of KD0.3mn (2009 net loss of KD0.7mn, 2008 net loss of KD 2.4m), although this was driven, inter alia, by the Murabaha impairments.

Shareholders' equity (excluding the policyholder deficit of KD0.3mn) amounted to KD8.1 million (USD28.5 million) at YE 2010, which is
relatively high in relation to the gross premiums of KD6.7 million. The shareholders use an interest-free loan ("Qard") to the policyholders' fund to improve capital fungibility. Although the policyholder fund deficit stands at KD0.3m, this compares very favourably with many other Takaful insurers in the region, who run larger policyholder deficits.

"The positive outlook reflects our expectation that National Takaful's strong position in the Kuwait Takaful market, will continue, together
with a continued reduction in the investment risk profile of the Group" says David Masters, a Moody's Assistant Vice President -- Analyst and lead analyst for National Takaful.

According to Moody's, the rating could be upgraded if there is: i) A continued reduction in the exposure to real estate and/or other high risk asset classes, ii) A significant write back of the Murabaha investment leading to improved capitalisation levels, and/or iii) National Takaful delivers improved product/geographic diversification.

Whilst the rating is on positive outlook, negative rating action is not considered likely in the near-term. However, negative rating pressure could arise in the event of: i) Sustained combined ratios in excess of 110% being delivered, ii) National Takaful incurring further impairment losses or increasing its investment risk appetite, and/or iii) Increased price competition within the Kuwait insurance market pressuring rates/premium volumes.

The following rating was assigned with a positive outlook:
National Takaful Insurance Company Insurance Financial Strength Rating of Ba1
The principal methodology used in this rating was Moody's Global Rating Methodology for Property and Casualty Insurers published in May 2010. Please see the Credit Policy page on www.moodys.com for a copy of this methodology.

Based in Kuwait City, Kuwait, National Takaful reported a consolidated net loss of KD0. 3 million in 2010, compared to the net loss of KD0.7 million recorded in 2009. National Takaful's total shareholders' equity decreased to KD8.1 million from KD8.8 million at year-end 2009. The written premium of KD 6.7mn in 2010 was a significant increase on the KD 5.7mn recorded in 2009.

REGULATORY DISCLOSURES
For ratings issued on a program, series or category/class of debt, this announcement provides relevant regulatory disclosures in relation to each rating of a subsequently issued bond or note of the same series or category/class of debt or pursuant to a program for which the ratings are derived exclusively from existing ratings in accordance with Moody's rating practices. For ratings issued on a support provider, this announcement provides relevant regulatory disclosures in relation to the rating action on the support provider and in relation to each particular rating action for securities that derive their credit ratings from the support provider's credit rating. For provisional ratings, this announcement provides relevant regulatory disclosures in relation to the provisional rating assigned, and in relation to a definitive rating that may be assigned subsequent to the final issuance of the debt, in each case where the transaction structure and terms have not changed prior to the assignment of the definitive rating in a manner that would have affected the rating. For further information please see the ratings tab on the issuer/entity page for the respective issuer on www.moodys.com.

The rating has been disclosed to the rated entity or its designated agent(s) and issued with no amendment resulting from that disclosure.

Information sources used to prepare the rating are the following : parties involved in the ratings, parties not involved in the ratings,
public information, and confidential and proprietary Moody's Investors Service information.

Moody's considers the quality of information available on the rated entity, obligation or credit satisfactory for the purposes of issuing a
rating.

Moody's adopts all necessary measures so that the information it uses in assigning a rating is of sufficient quality and from sources Moody's considers to be reliable including, when appropriate, independent third-party sources. However, Moody's is not an auditor and cannot in every instance independently verify or validate information received in the rating process.

Moody's Investors Service may have provided Ancillary or Other Permissible Service(s) to the rated entity or its related third parties within the two years preceding the credit rating action. Please see the special report "Ancillary or other permissible services provided to entities rated by MIS's EU credit rating agencies" on the ratings disclosure page on our website www.moodys.com for further information.

Please see the ratings disclosure page on www.moodys.com for general disclosure on potential conflicts of interests.

Please see the ratings disclosure page on www.moodys.com for information on (A) MCO's major shareholders (above 5%) and
for further information regarding certain affiliations that may exist between directors of MCO and rated entities as well as (C) the names of entities that hold ratings from MIS that have also publicly reported to the SEC an ownership interest in MCO of more than 5%. A member of the board of directors of this rated entity may also be a member of the board of directors of a shareholder of Moody's Corporation; however, Moody's has not independently verified this matter.

Please see Moody's Rating Symbols and Definitions on the Rating Process page on www.moodys.com for further information on the meaning of each rating category and the definition of default and recovery.

Please see ratings tab on the issuer/entity page on www.moodys.com for the last rating action and the rating history.

The date on which some ratings were first released goes back to a time before Moody's ratings were fully digitized and accurate data may not be available. Consequently, Moody's provides a date that it believes is the most reliable and accurate based on the information that is available to it. Please see the ratings disclosure page on our website www.moodys.com for further information.

Please see www.moodys.com for any updates on changes to the lead rating analyst and to the Moody's legal entity that has issued the rating.

David Masters
Asst Vice President - Analyst
Financial Institutions Group
Moody's Investors Service Ltd.
One Canada Square
Canary Wharf
London E14 5FA
United Kingdom
JOURNALISTS: 44 20 7772 5456
SUBSCRIBERS: 44 20 7772 5454

Simon Harris
MD - Financial Institutions
Financial Institutions Group
JOURNALISTS: 44 20 7772 5456
SUBSCRIBERS: 44 20 7772 5454

Releasing Office:
Moody's Investors Service Ltd.
One Canada Square
Canary Wharf
London E14 5FA
United Kingdom
JOURNALISTS: 44 20 7772 5456
SUBSCRIBERS: 44 20 7772 5454

© 2011 Moody's Investors Service, Inc. and/or its licensors and affiliates (collectively, "MOODY'S"). All rights reserved.

CREDIT RATINGS ARE MOODY'S INVESTORS SERVICE,INC.'S ("MIS") CURRENT OPINIONS OF THE RELATIVE FUTURE CREDIT RISK OFENTITIES, CREDIT COMMITMENTS, OR DEBT OR DEBT-LIKE SECURITIES. MIS DEFINESCREDIT RISK AS THE RISK THAT AN ENTITY MAY NOT MEET ITS CONTRACTUAL, FINANCIALOBLIGATIONS AS THEY COME DUE AND ANY ESTIMATED FINANCIAL LOSS IN THE EVENT OFDEFAULT. CREDIT RATINGS DO NOT ADDRESS ANY OTHER RISK, INCLUDING BUT NOTLIMITED TO: LIQUIDITY RISK, MARKET VALUE RISK, OR PRICE VOLATILITY. CREDITRATINGS ARE NOT STATEMENTS OF CURRENT OR HISTORICAL FACT. CREDIT RATINGS DO NOTCONSTITUTE INVESTMENT OR FINANCIAL ADVICE, AND CREDIT RATINGS ARE NOTRECOMMENDATIONS TO PURCHASE, SELL, OR HOLD PARTICULAR SECURITIES. CREDITRATINGS DO NOT COMMENT ON THE SUITABILITY OF AN INVESTMENT FOR ANY PARTICULARINVESTOR. MIS ISSUES ITS CREDIT RATINGS WITH THE EXPECTATION AND UNDERSTANDINGTHAT EACH INVESTOR WILL MAKE ITS OWN STUDY AND EVALUATION OF EACH SECURITY THATIS UNDER CONSIDERATION FOR PURCHASE, HOLDING, OR SALE.

ALL INFORMATION CONTAINED HEREIN IS PROTECTED BY LAW, INCLUDING BUT NOT LIMITEDTO, COPYRIGHT LAW, AND NONE OF SUCH INFORMATION MAY BE COPIED OR OTHERWISEREPRODUCED, REPACKAGED, FURTHER TRANSMITTED, TRANSFERRED, DISSEMINATED,REDISTRIBUTED OR RESOLD, OR STORED FOR SUBSEQUENT USE FOR ANY SUCH PURPOSE, INWHOLE OR IN PART, IN ANY FORM OR MANNER OR BY ANY MEANS WHATSOEVER, BY ANYPERSON WITHOUT MOODY'S PRIOR WRITTEN CONSENT. All information contained hereinis obtained by MOODY'S from sources believed by it to be accurate and reliable.Because of the possibility of human or mechanical error as well as otherfactors, however, all information contained herein is provided "ASIS" without warranty of any kind. MOODY'S adopts all necessary measures sothat the information it uses in assigning a credit rating is of sufficientquality and from sources MOODY'S considers to be reliable including, whenappropriate, independent third-party sources. However, MOODY'S is not anauditor and cannot in every instance independently verify or validateinformation received in the rating process. Under no circumstances shallMOODY'S have any liability to any person or entity for (a) any loss or damagein whole or in part caused by, resulting from, or relating to, any error(negligent or otherwise) or other circumstance or contingency within or outsidethe control of MOODY'S or any of its directors, officers, employees or agentsin connection with the procurement, collection, compilation, analysis,interpretation, communication, publication or delivery of any such information,or any direct, indirect, special, consequential, compensatory or incidentaldamages whatsoever (including without limitation, lost profits), even ifMOODY'S is advised in advance of the possibility of such damages, resultingfrom the use of or inability to use, any such information. The ratings,financial reporting analysis, projections, and other observations, if any,constituting part of the information contained herein are, and must beconstrued solely as, statements of opinion and not statements of fact orrecommendations to purchase, sell or hold any securities. Each user of theinformation contained herein must make its own study and evaluation of eachsecurity it may consider purchasing, holding or selling. NO WARRANTY, EXPRESSOR IMPLIED, AS TO THE ACCURACY, TIMELINESS, COMPLETENESS, MERCHANTABILITY ORFITNESS FOR ANY PARTICULAR PURPOSE OF ANY SUCH RATING OR OTHER OPINION ORINFORMATION IS GIVEN OR MADE BY MOODY'S IN ANY FORM OR MANNER WHATSOEVER.

MIS, a wholly-owned credit rating agency subsidiary of Moody's Corporation("MCO"), hereby discloses that most issuers of debt securities(including corporate and municipal bonds, debentures, notes and commercialpaper) and preferred stock rated by MIS have, prior to assignment of anyrating, agreed to pay to MIS for appraisal and rating services rendered by itfees ranging from $1,500 to approximately $2,500,000. MCO and MIS also maintainpolicies and procedures to address the independence of MIS's ratings and ratingprocesses. Information regarding certain affiliations that may exist betweendirectors of MCO and rated entities, and between entities who hold ratings fromMIS and have also publicly reported to the SEC an ownership interest in MCO ofmore than 5%, is posted annually at www.moodys.com under the heading"Shareholder Relations -- Corporate Governance -- Director and ShareholderAffiliation Policy."

Any publication into Australia of this document is by MOODY'S affiliate,Moody's Investors Service Pty Limited ABN 61 003 399 657, which holdsAustralian Financial Services License no. 336969. This document is intended tobe provided only to "wholesale clients" within the meaning of section761G of the Corporations Act 2001. By continuing to access this document fromwithin Australia, you represent to MOODY'S that you are, or are accessing thedocument as a representative of, a "wholesale client" and thatneither you nor the entity you represent will directly or indirectlydisseminate this document or its contents to "retail clients" withinthe meaning of section 761G of the Corporations Act 2001.

Notwithstanding the foregoing, credit ratings assigned on and after October 1,2010 by Moody's Japan K.K. ("MJKK") are MJKK's current opinions ofthe relative future credit risk of entities, credit commitments, or debt or debt-like securities. In such a case, "MIS" in the foregoingstatements shall be deemed to be replaced with "MJKK".

MJKK is a wholly-owned credit rating agency subsidiary of Moody's Group JapanG.K., which is wholly owned by Moody's Overseas Holdings Inc., a wholly-ownedsubsidiary of MCO.

This credit rating is an opinion as to the credit worthiness or a debtobligation of the issuer, not on the equity securities of the issuer or anyform of security that is available to retail investors. It would be dangerous for retail investors to make any investment decision based on this creditrating. If in doubt you should contact your financial or other professional adviser.

© Moody's 2011