Capital Standards Rating Co. (CSR) has upgraded the Insurer's Financial Strength Rating (IFSR) to 'BB' and the national rating to 'BBBkw' of Boubyan Takaful Insurance Company K.S.C (closed). The outlook for the rating remains Stable.
Boubyan Takaful Insurance Company (BTIC) has shown remarkable improvements in the Financial Year 2011, reflecting the company's growing market position in the midst of the intense competition. BTIC has implemented a new strategy that may effectively turnaround the business in current year 2012. The new strategy of the company touches upon many important areas such as the separation of underwriting and claims settlement, the enhanced distribution network and the improved corporate governance standards.
The support BTIC received from Boubyan Bank (BB) and National Bank of Kuwait (NBK) has been instrumental, and has provided the company an advantage in comparison to the new takaful entrants. The rating is constrained by the high underwriting costs and investment losses contributed to the company's overall losses. Expenses may continue to remain high in the near future as BTIC is in the expansion phase. Further, the investment losses have been negatively impacting profitability of BTIC for the past three years. The rating is also positively impacted by the changes that CSR made to the "Insurance Rating Methodology".
The rating methodology used in rating BTIC is "Insurance Rating Methodology", and the "Takaful - Rating Approach" and it can be found at www.capstandards.com in the 'methodologies brief' sub-directory under the Rating tab.
BTIC was established in 2006 to provide insurance products in compliance with the Islamic Sharia Principles (Takaful). The company is majorly owned by Boubyan Bank (67%) and it offers a number of takaful plans including General Takaful - Motor, General Takaful - Non Motor, and Family & Medical Takaful. BTIC is regulated by the Ministry of Commerce & Industry (Insurance Department). In June 2011, CSR assigned BTIC an IFSR rating of "BB-" and a national scale rating of "BBB-kw" with a stable outlook.
Additional information is available at www.capstandards.com. A detailed Credit Opinion Update Report, explaining the key rating considerations is available for CSR's subscribers.
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© Press Release 2012
