Zamzam Takaful Insurance Company (Zamzam) has a good track record of underwriting and overall profitability over the past five years. In addition, the predominance of short-tail insurance business reduces reserving risk and enables the insurer to respond to changing market conditions without much delay, notes Moody's Ratings (Moody's).
Reflecting these favourable factors, the global credit rating agency has assigned a ‘B1’ insurance financial strength rating (IFSR) to Zamzam. The outlook is ‘Stable’.
Outlook
The ‘Stable’ outlook reflects Moody’s expectation that Zamzam will maintain its underwriting profitability and adequate capital buffers above regulatory capital requirements, whilst the asset and liquidity risk inherent in its organisational structure will continue to hold back the rating.
Rating rationale
Moody’s also says that the rating is held back by Zamzam's:
(i) elevated asset and liquidity risk given the significance of operating assets from its non-insurance subsidiaries relative to its consolidated (policyholders' and shareholders') equity and policyholder liabilities;
(ii) modest market position in the Kuwaiti insurance market, which constrains its growth and diversification prospects amid intense competition and product concentration to predominantly one line of business, motor third-party liability, which is one of the most competitive lines of insurance in Kuwait; and
(iii) complex group structure, including multiple subsidiaries across non-insurance sectors, which elevates governance and risk management challenges along with the potential for co-mingling of insurance and non-insurance related assets.
Profitability
Despite its relatively small scale—ranking as the 17th largest insurer in Kuwait—Zamzam has demonstrated good underwriting profitability and performance across its subsidiaries, aiding overall profitability with a five-year average return on capital (ROC) of 10.3% and a five-year average combined ratio (COR) of 89.6% at YE2025. Moreover, the good performance of the group has led to good levels of capital, with consolidated equity reaching KWD18.3m ($59.3m) and resulting in a low gross underwriting leverage of 0.6x and regulatory solvency buffers comfortably above the regulatory minimum at YE2025. This profitability trend has continued in 1H2026, where interim results show a consolidated (policyholders' and shareholders') net income of KWD2.6m.
However, given the complex ownership and operations of its subsidiaries across multiple sectors, there are significant levels of intergroup and overall receivables such that receivables accounted for over 85% of its consolidated equity at YE2025. This constrains the liquidity of the group, with available cash and bank deposits across the group equating to just around 11.3% of consolidated equity and only 49.6% of net insurance liabilities.
Positively, Moody’s notes there is some improvement at 30 June 2026 with the group's liquid cash and bank balances representing 74.6% of net insurance liabilities, albeit still indicating a liquidity shortage with regard to insurance operations.
ESG
The IFSR also takes into account Azam’s governance as part of Moody’s environmental, social and governance (ESG) considerations. Moody’s considers Azam’s elevated asset risk and resultant weakening of quality of capital, weakness in its liquidity, its complex group structure and concentrated ownership and board structure as governance challenges. Moody’s reflects such governance challenges in Azam’s Governance Issuer Profile Score of G-4, driven by Financial Strategy and Risk Management, Organisational Structure and Board Structure and Policies. This results in the Credit Impact Score of CIS-4, reflecting the material impact of governance on Zamzam's rating. As a result, Zamzam's B1 IFSR includes a one-notch “Other Considerations” adjustment for Management, Governance and Risk Management.