LONDON — AM Best has affirmed the Financial Strength Rating of A- (Excellent) and the Long-Term Issuer Credit Rating of “a-” (Excellent) of Kuwait Reinsurance Company K.S.C.P. (Kuwait Re) (Kuwait). The outlook of these Credit Ratings (ratings) is stable.
The ratings reflect Kuwait Re’s balance sheet strength, which AM Best assesses as very strong, as well as its adequate operating performance, neutral business profile and appropriate enterprise risk management.
Kuwait Re’s balance sheet strength is underpinned by its risk-adjusted capitalisation at the strongest level, as measured by Best’s Capital Adequacy Ratio (BCAR). The company’s balance sheet strength is supported by prudent reserving practices and sufficient liquidity to support operations. Capital consumption continues to be driven predominantly by underwriting risks, due to the company’s high premium retention. A partially offsetting factor is Kuwait Re’s investment portfolio, which although largely allocated to cash and fixed income, is exposed to volatility through real estate and equity holdings (which account for approximately 19% of total investments).
Kuwait Re’s focus on underwriting selection and discipline has translated into stable technical performance in recent years. The company has reported a healthy five-year average (2016-2020) combined ratio of 97.2%. Investment income has further supported overall profitability, contributing to pre-tax profits of KWD 5.5 million in 2020 (2019: KWD 5.0 million), which translated to a return on equity of 9.5% for the year.
Kuwait Re’s business profile is supported by its good geographical diversification, through operations spanning the Middle East and North Africa, Asia-Pacific and Central and Eastern Europe. The underwriting portfolio is well-diversified by line of business, providing proportional and non-proportional cover to its cedants. In 2020, Kuwait Re wrote gross written premium of KWD 57.0 million.
AM Best is a global credit rating agency, news publisher and data analytics provider specialising in the insurance industry. Headquartered in the United States, the company does business in over 100 countries with regional offices in London, Amsterdam, Dubai, Hong Kong, Singapore and Mexico City. For more information, visit www.ambest.com.
© Press Release 2021