Kuwait Reinsurance Company (Kuwait Re) has sustained improvement in its operating performance in recent years, evidenced by a return-on-equity ratio that increased steadily to 16.5% in 2024 from 9.5% in 2020, says AM Best.
Reflecting this, AM Best has upgraded Kuwait Re’s Financial Strength Rating to ‘A’ (Excellent) from ‘A-’ (Excellent) and the Long-Term Issuer Credit Rating to ‘a’ (Excellent) from ‘a-’ (Excellent), which is majority owned by Al Ahleia Insurance Company. The outlook of these credit ratings has been revised to ‘Stable’ from ‘Positive’.
The ratings also reflect Kuwait Re’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.
Kuwait Re’s earnings have been underpinned by robust underwriting profitability, which includes substantial reserving margins that provide a buffer against volatility. AM Best expects Kuwait Re’s underwriting discipline and prudent risk selection to support its prospective operating metrics.
Balance sheet strength
Kuwait Re’s balance sheet strength is underpinned by its risk-adjusted capitalisation, which is assessed 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 good liquidity.
A partially offsetting factor is Kuwait Re’s holdings of higher-risk assets, with its real estate and equity portfolio equating to approximately 13% of total investments at year-end 2024, which exposes its capital base to potential volatility.
Business profile
Kuwait Re’s neutral business profile assessment reflects its diversification by geography and product offerings, says AM Best. The company’s operations span the Middle East, North Africa, Asia-Pacific and Central and Eastern Europe, where it provides proportional and non-proportional cover to its cedants. Kuwait Re reported insurance revenue of KWD79.9m ($260.1m) in 2024, representing a 10% growth compared with 2023, driven in part by favourable reinsurance market conditions in its core markets.