LONDON–(BUSINESS WIRE)–#insurance–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 at the strongest level, as measured by Best’s Capital Adequacy Ratio (BCAR). Al Ahleia’s unleveraged balance sheet and financial flexibility secured through access to capital markets, support the current balance sheet assessment. However, the company’s holdings in private equity and real estate funds are viewed 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 uncertainties over the company’s ability to recover its receivables.
Al Ahleia’s operating performance track record remains commensurate with a strong performance assessment. The company has reported improving pre-tax profits in each of the past five years, which reached KWD 15.0 million in 2021. Over this period, Al Ahleia generated a five-year (2017-2021) weighted average return-on-equity of 9.6%, as calculated by AM Best. Profitability has been underpinned by technical results, and Al Ahleia achieved a five-year (2017-2021) weighted average consolidated combined ratio of 91.8%. Al Ahleia’s underwriting performance has benefited from its strong direct underwriting results in Kuwait; that counterbalanced the higher combined ratios reported by its subsidiary, Kuwait Reinsurance Company SAKP (Kuwait Re), which reported a five-year (2017-2022) weighted average combined ratio of 95.9%.
Al Ahleia’s business profile reflects its established position as a top four insurer in Kuwait’s direct market, where it has 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 generated gross written premium of KWD 113.9 million in 2021, with Kuwait Re contributing KWD 69.0 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 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 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.
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Emily Thompson
Financial Analyst
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