LONDON — AM Best has placed under review with developing implications the Financial Strength Rating of A (Excellent) and the Long-Term Issuer Credit Ratings of “a” of Gulf Insurance Group K.S.C.P. (GIG) (Kuwait) and its subsidiary, Gulf Insurance and Reinsurance Company K.S.C. (Closed) (Kuwait).
The Credit Rating (rating) actions follow the announcement on 30 November 2020, that GIG has signed a purchase agreement to acquire 100% of AXA Insurance (Gulf) B.S.C. (c) (Bahrain), 50% of AXA Cooperative Insurance Company (Saudi Arabia) and 28% of AXA Green Crescent Insurance Company PJSC (United Arab Emirates) for consideration of USD 475 million. A capital injection will be provided to GIG, by its existing shareholders, to help fund the acquisition. The balance is expected to be funded through bank debt, and the earnings of the target companies following year-end 2020.
The under review with developing implications status reflects AM Best’s uncertainty over the group’s post-acquisition risk-adjusted capitalisation, leverage and liquidity. The acquisition is expected to add gross written premium (GWP) of approximately USD 1 billion to the GIG group (GWP of USD 1.3 billion in 2019), give it access to the insurance markets of Oman, Qatar and the UAE, and strengthen its competitive position in Bahrain and Saudi Arabia. The ratings will remain under review until the group’s post-acquisition metrics for risk-adjusted capitalisation, leverage and liquidity are clear.
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 media use of Best’s Credit Ratings and AM Best press releases, please view Guide for Media - Proper Use of Best’s Credit Ratings and AM Best Rating Action Press Releases.
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© Press Release 2020