Best’s News & Research Service - May 28, 2021 12:02 PM (EDT)
AM Best Affirms Credit Ratings of Al Ahleia Insurance Company S.A.K.P.
- May 28, 2021 12:02 PM (EDT)
London //BestWire// - AM Best has affirmed the Financial Strength Rating of A- (Excellent) and the Long-Term Issuer Credit Rating of “a-” (Excellent) of Al Ahleia Insurance Company S.A.K.P. (Al Ahleia) (Kuwait). The outlook of these Credit Ratings (ratings) is stable.
The ratings reflect Al Ahleia’s balance sheet strength, which AM Best assesses as very strong, as well as its strong operating performance, neutral business profile and appropriate enterprise risk management (ERM).
Al Ahleia’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 balance sheet strength further benefits from the absence of financial leverage and good financial flexibility through access to capital markets. The company’s significant holdings in private equity and real estate funds continue to offset the balance sheet, exposing its capital base to potential volatility. AM Best views Al Ahleia’s dependence on reinsurance as modest, with high cession rates of its direct portfolio diluted by significant retention of reinsurance business written by the company’s subsidiary, Kuwait Reinsurance Company K.C.S.P. (Kuwait Re).
Al Ahleia has reported improving profits in each of the past four years, generating a return on capital of 10.8% in 2020 and a weighted five-year average (2016-2020) of 9.1%. Returns are supported by solid technical performance and positive investment earnings. The group’s direct insurance portfolio has a track record of excellent performance, supported by favourable inward reinsurance commissions. Consolidated technical margins are reduced by the lower profitability of reinsurance business underwritten by Kuwait Re, who reported a combined ratio of 97.6% in 2020; however, still remain strong, with a consolidated combined ratio of 89.4% in 2020. Prospective consolidated earnings are expected to reflect the continued excellent performance of Al Ahleia’s direct insurance operations, as well as the benefits of strategic decisions implemented by Kuwait Re to improve the profitability of its reinsurance portfolio.
Al Ahleia has an established position as a top four insurer in Kuwait’s direct market, with a leading market share in the commercial insurance segment. The group achieves geographical diversification through its reinsurance operation, Kuwait Re, which provides proportional and non-proportional cover to cedants in the Middle East and North Africa, Asia-Pacific and Central and Eastern Europe. On a consolidated basis, Al Ahleia wrote gross written premium of KWD 101.3 million in 2020, with Kuwait Re contributing KWD 53.8 million.
Whilst Al Ahleia and Kuwait Re have in place risk management frameworks considered appropriate for their specific risk profiles, Al Ahleia is still developing a comprehensive group-wide ERM framework. As the group’s risk profile continues to develop, it will become increasingly important for Al Ahleia to enhance its ERM capabilities, particularly in areas such as capital management and market risk.
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.
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.