AM Best Revises Outlooks to Positive for Kuwait Reinsurance Company K.S.C.P.

AM Best has revised the outlooks to positive from stable and 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).

These Credit Ratings (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. The ratings factor in no rating enhancement or drag arising from the company’s majority ownership by Al Ahleia Insurance Company S.A.K.P. (Al Ahleia).

The positive outlooks reflect a sustained improvement in Kuwait Re's operating performance, evidenced by a return-on-equity ratio that has increased year-on-year from 9.3% in 2019 to 14.4% in 2023. Earnings were underpinned by robust underwriting margins and substantial development of reserving buffers, which has tempered technical earnings in recent years due to its prudency. AM Best expects Kuwait Re’s underwriting discipline and prudent risk selection to support continued improvements in its operating metrics.

Kuwait Re’s balance sheet strength is underpinned by its risk-adjusted capitalisation, which is assessed at the strongest level, as measured by Best’s Capital Adequacy Ratio (BCAR). The company’s balance sheet strength is supported by a track record of internal capital generation, along with prudent reserving practices and good liquidity to support operations. A partially offsetting factor is Kuwait Re’s modest holdings of higher-risk assets, with its real estate and equity portfolio equating to approximately 13% of total investments at year-end 2023, which exposes its capital base to potential volatility.

Kuwait Re’s business profile assessment reflects its diversification by geography and product offering. The company’s operations span the Middle East, North Africa, Asia-Pacific and Central and Eastern Europe, where the company provides proportional and non-proportional cover to its cedants. Kuwait Re generated insurance revenue of KWD 71.4 million in 2023, equivalent to USD 233.0 million, representing a combined (non-life & life) growth of 23% compared with 2022, driven in part by favourable reinsurance market conditions in its core markets.

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 use of Best’s Credit Ratings, Best’s Performance Assessments, Best’s Preliminary Credit Assessments and AM Best press releases, please view Guide to Proper Use of Best’s Ratings & Assessments.

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.

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