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 Kuwait Reinsurance Company K.S.C.P. (Kuwait Re) (Kuwait). The outlook of these Credit Ratings (ratings) is stable.
The ratings reflect Kuwait Re’s balance sheet strength, which AM Best assesses 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 its risk-adjusted capitalisation at the strongest level, 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 prudent reserving practices and sufficient liquidity to support operations. The company’s capital consumption in the BCAR model is predominantly driven by underwriting risk, due to its high premium retention. While Kuwait Re’s risk-adjusted capitalisation has remained at the strongest level, its BCAR scores deteriorated over 2021, following strong underwriting growth.
Kuwait Re reported balanced earnings in 2021, with pre-tax profits of KWD 6.6 million (2020: KWD 5.5 million) equally generated by technical and non-technical operations that translated to a return-on-equity of 10.5% (2020: 9.5%). Enhanced underwriting selection and discipline has resulted in solid underwriting returns in recent years, with the company reporting a five-year (2017-2021) weighted average combined ratio of 95.9%. A noted improvement in Kuwait Re’s combined ratio in 2021 to 92.2% from 97.3% in 2020 can be attributed to increased earned premium, which helped reduce the expense ratio, and a continued robust loss ratio experience.
Kuwait Re’s business profile assessment reflects its good diversification by geography and product offering. Operations span the Middle East, North Africa, Asia-Pacific and Central and Eastern Europe, where the company provides proportional and non-proportional cover to its cedants. Kuwait Re reported gross written premium of KWD 71.6 million in 2021, a 26% increase on 2020 (KWD 57.0 million), driven in part by favourable reinsurance market conditions in its core markets.
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