Moody's Ratings (Moody's) has upgraded Wethaq Takaful Insurance Company's (Wethaq) Insurance Financial Strength Rating (IFSR) to 'B1' from 'B2', and changed the outlook to 'Positive' from 'Negative'.
In March 2026, Kuwait's insurance regulator, the Insurance Regulatory Unit (IRU) approved the cancellation of Wethaq's life insurance licence and thereby reduced the minimum capital requirement from KWD10m ($32.2m) to KWD5m, allowing Wethaq to come into compliance with the regulatory requirement. This alleviated the governance risks arising from Wethaq's previous non-compliance, which had been a constraint on its rating.
The positive outlook reflects Wethaq's improving business profile and profitability, as evidenced by 49.5% growth in insurance revenue to KWD6.3m in 2025 and net income of KWD2.3m. Continued profitable growth would support organic capital generation and liquidity, and, if sustained, could strengthen the company's asset quality, capital adequacy, profitability and overall credit profile.
Wethaq's ‘B1’ IFSR also reflects:
(i) the company's growing underwriting franchise and good profitability, reflected in 2025 combined ratio (COR) of 71.3%;
(ii) improved capital adequacy, reflected in restored regulatory solvency compliance and 2025 gross underwriting leverage of just below 1.0x; and
(iii) improved liquidity and invested asset quality, as internally generated cash flows were largely invested in bank deposits, reducing high-risk assets to 70.7% of shareholders' equity at the end of 2025 from 90.0% at the end of 2024.
Constraints
Wethaq's rating remains constrained by its modest market position in Kuwait, intense competition, and elevated product risk and concentration from its reliance on broker-distributed motor third-party liability business.
The rating is also held back by the company's sizeable real estate exposure in Egypt, which continues to weigh on asset quality and capital, despite recent improvements in liquidity and invested asset quality. The asset represented 18.7% of consolidated policyholder and shareholder assets and 41.7% of consolidated equity at the end of 2025.