LONDON--(BUSINESS WIRE)--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 consolidated risk-adjusted capitalisation, which is assessed at the strongest level, as measured by Best’s Capital Adequacy Ratio (BCAR). Al Ahleia has maintained a robust consolidated liquidity position; however, AM Best views the company’s holdings in private equity and real estate funds as an offsetting factor, increasing asset risk and exposing its capital base to potential volatility. In addition, a further offsetting factor is Al Ahleia’s elevated debtor balances and slow collection periods, which creates uncertainty over the company's ability to recover its receivables.
Al Ahleia’s operating performance track record remains commensurate with a strong assessment. The company has reported improving pre-tax profits in each of the past five years, reaching KWD 18.7 million in 2022. Over this period, Al Ahleia generated a five-year (2018-2022) weighted average return-on-equity of 10.6%. Profitability has been underpinned by underwriting results, with Al Ahleia achieving a five-year (2018-2022) weighted average consolidated combined ratio of 91.8%, as calculated by AM Best. This reflects strong performance arising from Al Ahleia’s direct non-life operations in Kuwait, as well as the improving combined ratios reported by its subsidiary, Kuwait Reinsurance Company K.S.C.P. (Kuwait Re returned a five-year (2018-2022) weighted average combined ratio of 94.8%).
Al Ahleia’s business profile reflects its established position as a top four insurer in Kuwait’s direct market, where it has a leading position 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 underwrote gross written premium of KWD 126.0 million (USD 412.8 million) in 2022, with Kuwait Re contributing KWD 74.2 million (USD 243.2 million).
Al Ahleia and Kuwait Re’s risk management frameworks are considered appropriate for their individual risk profiles. As the group’s risk profile continues to develop, it will become increasingly important for Al Ahleia to enhance its ERM capabilities at a group level, particularly in areas such as capital management and regulatory compliance. AM Best notes that Al Ahleia’s first quarter 2023 interim financial information includes an adverse conclusion from its auditor related to reporting requirements under IFRS 17 and IFRS 9, and expects the company to address and re-issue the interim results in the near term.
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