AM Best, the global credit rating agency, has revised the outlook 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).
The rating agency has stated that these ratings reflect Kuwait Re’s balance sheet strength which have been assessed as very strong, underpinned by its risk-adjusted capitalisation, 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 good reserving practices and liquidity to support operations.
AM Best explains that a partially offsetting factor is the reinsurer’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.
Ratings also reflect the firm’s sustained improvement in operating performance, neutral business profile and appropriate enterprise risk management. Kuwait Re’s return-on-equity ratio 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,” explained AM Best.
Although 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).
