AM Best has affirmed the Financial Strength Rating of A- (Excellent) and the Long-Term Issuer Credit Rating of “a-” of Kuwait Reinsurance Company K.S.C.P. (Kuwait Re) (Kuwait). The outlook of these Credit Ratings (ratings) remains stable.
The ratings reflect Kuwait Re’s balance sheet strength, which AM Best categorises 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 risk-adjusted capitalisation, which, as measured by Best’s Capital Adequacy Ratio (BCAR), is at the strongest level. The company’s balance sheet strength also benefits from prudent reserving practices. The company maintains good levels of liquidity, as evidenced by a ratio of liquid assets to net technical reserves of 109% at the end of 2018. Capital consumption is driven predominantly by underwriting risks, due to the company’s top line growth in 2018 and high premium retention.
Following a change in management in 2016, the company altered its business strategy and increased its focus on bottom line profitability. This has translated into improved technical performance and reduced volatility in operating results, with the company reporting a healthy average combined ratio for the period 2016 to 2018 of 96.9%, and an average return on equity of 6.2%.
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 class of business, and the company provides proportional, non-proportional and facultative solutions to its cedants. Since its change in strategy, Kuwait Re’s portfolio mix has shifted in favour of facultative and excess of loss business, with these two lines of business accounting for 53% of the KWD 46.6 million premium written in 2018 (2017: 58% of KWD 35.1 million). Whilst Kuwait Re is predominantly a non-life reinsurer, its life reinsurance operations continue to grow, with gross written premiums increasing from KWD 1.8 million in 2017 to KWD 2.6 million in 2018.
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 Understanding 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.