AM Best Affirms Credit Ratings of Kuwait Insurance Company S.A.K.P.

AM Best has affirmed the Financial Strength Rating of A- (Excellent) and the Long-Term Issuer Credit Rating of "a-" (Excellent) of Kuwait Insurance Company S.A.K.P. (KIC) (Kuwait). The outlook of these Credit Ratings (ratings) is stable.

The ratings reflect KIC's balance sheet strength, which AM Best assesses as very strong, as well as its strong operating performance, limited business profile and appropriate enterprise risk management.

KIC's balance sheet strength is underpinned by its risk-adjusted capitalisation at the strongest level, as measured by Best's Capital Adequacy Ratio (BCAR). Further supporting the balance sheet strength assessment is KIC's consistent internal capital generation and prudent reserving practices. Offsetting factors include the company's high-risk investment strategy with a concentration to equity holdings, which exposes its capital position to potential volatility, and the company's elevated dependence on reinsurance, although the associated counterparty risk is partially mitigated by the use of a panel of financially sound reinsurers.

KIC's strong operating performance is demonstrated by a five-year (2017-2021) weighted average return-on-equity ratio of 10.9%, and is driven by the company's solid technical results. Non-life underwriting profitability has been strong, with combined ratios below 90% in each of the past five years, and growing life operations have positively contributed to earnings since 2018. Investment performance supports overall earnings with a five-year (2017-2021) net investment return (excluding gains and losses) of 3.5%. However, KIC's investment returns remain subject to volatility from regional equity market performance.

KIC holds a well-established position within its domestic insurance market of Kuwait, from which it sources all its premium. In 2021, KIC generated gross written premium of KD 46.9 million (USD 155.4 million), compared with KD 38.1 million in 2020. The company has good product diversification, offering a comprehensive range of non-life, life and takaful products, and maintains a strong presence in corporate business lines, including general accident and property. KIC's near term business plan includes geographic expansion, and establishing operations in Egypt's life insurance market. Although projected to be at a small scale relative to its domestic business, KIC's regional expansion presents operational and execution risks.

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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