Al Ahleia Insurance Co (Al Ahleia), which is the majority shareholder of Kuwait Re, has an operating performance that is commensurate with a strong assessment, says AM Best.
The insurer has reported improving pre-tax profits over the past five years, reaching KWD22.7m ($74.3m) in 2023, equivalent to a return on equity of 14.3%.
Profitability has been underpinned by good underwriting results, with Al Ahleia achieving a consolidated net-net combined ratio of 89.3% in 2023, as calculated by AM Best. This reflects strong performance arising from the company’s direct operations in Kuwait, as well as the improving results reported by its subsidiary, Kuwait Re.
Ratings outlooks revised to ‘Positive’
AM Best has revised Al Ahleia’s to ’Positive’ from ‘Stable’ and affirmed the Financial Strength Rating of ‘A-’ (Excellent) and the Long-Term Issuer Credit Rating of ‘a-’ (Excellent).
The credit 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).
The positive outlooks reflect a strengthening of Al Ahleia's consolidated balance sheet strength in recent periods. Notably, the company’s risk-adjusted capitalisation, as measured by Best’s Capital Adequacy Ratio (BCAR), has improved, underpinned by robust organic capital generation, as well as the development of significant reserving buffers. Al Ahleia is expected to continue to grow profitably whilst maintaining a robust capital position, benefiting from its good local market presence, as well as international diversification through its reinsurance arm.
Business profile
Al Ahleia’s business profile reflects its established position as a top-tier insurer in Kuwait’s insurance market, where it has a leading position in the commercial insurance segment. The group achieves geographical diversification through its reinsurance operation, Kuwait Re. On a consolidated basis, Al Ahleia generated consolidated insurance revenue of KWD121.4m in 2023, an increase of 16% against the prior year.
Al Ahleia’s and Kuwait Re’s risk management frameworks are considered appropriate for their respective risk profiles. As the group’s risk profile continues to grow in complexity, it will become increasingly important for Al Ahleia to enhance its ERM capabilities at a group level.