Al Ahleia Insurance Company (AIC) has maintained its strong underwriting performance and prudent investment profile, and significantly strengthened its business model over the past few years, notably thanks to its subsidiary, Kuwait Re, according to S&P Global Ratings (S&P) in a recent report.
Although the consequences of the geopolitical tensions in the Middle East remain uncertain, S&P believes that the insurer’s diversification and prudent underwriting practices make it resilient to the situation.
Middle East tensions
In S&P’s view, the Middle East conflict will continue to have a limited effect on AIC. A framework for a memorandum of understanding between Iran and the US, announced on 14 June, aligns with S&P’s base-case assumption that disruptions in the Strait of Hormuz would begin easing in the second half of 2026.
While the extent of the conflict fallout is still difficult to assess, S&P currently does not anticipate any significant underwriting losses that would erode AIC's underwriting performance given most of its policies exclude war, and the few war-related exposures left are highly reinsured. The conflict may have a long-lasting impact on growth opportunities and inflate claims, but S&P sees AIC's high diversification, notably brought by Kuwait Re, and strong efficiency as mitigating factors. Furthermore, the entity’s strong capital buffers shield it, in S&P’s view, from any unexpected large losses.
Ratings outlook revised to ‘Positive’
The global credit rating agency says that it has therefore revised its outlook on AIC to ‘Positive’ from ‘Stable’. At the same time, S&P affirms AIC’s 'A-' global scale issuer credit and financial strength ratings on AlC. S&P said that it could raise AIC’s ratings over the next two years if the company continues to profitably scale up, while maintaining sound diversification and very robust capital adequacy buffers.
Financial performance
In S&P’s view, AIC has improved its market standing through enhanced business diversification and profitable growth over the past five years. Kuwait Re, which contributed over 66% of the group’s total gross written premium in 2025, is a key strength for AIC and has enabled the group to build a diversified business mix across primary and reinsurance segments. As of 2025, net income stood at KWD27.8m (about $90m), which represents 63% growth compared to a net income of KWD17.1m in 2022.
The group is also more efficient than peers, with a highly competitive net combined ratio of 82.1% in 2025.
While AIC’s overall scale of operations and capital base remain smaller than higher-rated regional peers, S&P expects it to further expand its net income and capital over 2026-2028 while maintaining better higher efficiency than its peers. Its ability to generate high return on equity (ROE), even relative to larger peers, remains a key differentiator. ROE stood at 15.5% at the end of 2025.
S&P expects AIC’s growth to moderate over the next two years, but underwriting performance should remain strong. AIC's insurance revenue grew by 6% between 2024 and 2025, but S&P expect sit to increase by 1% in 2026 as the company will likely keep focusing on profitability in a market subject to pricing pressures and shaken by the Middle East conflict.
In parallel, the interest rate reductions that took place throughout 2025 will impact investment income. As such, S&P expects net income to moderate to KWD25.7m in 2026, but to then rebound and approach KWD31m in 2028, helped by a better-than-peers efficiency, as the credit rating agency forecasts a combined ratio within the 85.0%–90.0% range over the forecast period. AIC should therefore continue to scale up its operations profitably.
Capitalisation
S&P expects AIC’s capital to increase further, supported by sustained earnings generation.
AIC's capitalisation is expected to remain above the S&P benchmark of 99.99% over the two-year outlook horizon. While the group’s capital base remains small in absolute terms, its robust risk-based capital adequacy serves as a key rating strength.
Supported by positive net income projections, S&P expects the capital base to expand over the next two years, limiting the need for additional capital injections at this stage. Still, capital remains small in absolute amounts and is at 28% composed of non-life reserve adjustments, which S&P sees as of lower quality than shareholders’ equity. The credit rating agency therefore considers capital and earnings to be very strong.