The ratings reflect Al Ahleia’s balance sheet strength, which AM Best categorises as very strong, as well as its strong operating performance, neutral business profile and appropriate enterprise risk management (ERM).
Al Ahleia’s balance sheet strength is underpinned by risk-adjusted capitalisation, which, as measured by Best’s Capital Adequacy Ratio (BCAR), is at the strongest level, and good financial flexibility with no financial leverage. An offsetting factor is the company’s significant holdings in private equity and real estate funds, which expose its capital base to potential volatility. Al Ahleia’s dependence on reinsurance is moderate overall, as the high cession rate of the direct portfolio is diluted by significant retention of reinsurance business written by the company’s subsidiary, Kuwait Reinsurance Company K.C.S.P. (Kuwait Re).
Al Ahleia has a five-year average return on capital of 9.3%, supported by solid technical performance and positive, albeit volatile, investment earnings. The company’s direct insurance portfolio has a track record of excellent performance, helped by favourable inward reinsurance commissions. On a consolidated basis, technical margins are reduced by the lower profitability of reinsurance business underwritten by
Al Ahleia has an established position as a top four insurer in Kuwait’s direct market, with a particular good market share in the commercial segment. Its profile is enhanced by reinsurance arm, Kuwait Re, which provides international diversification through operations spanning the
Whilst Al Ahleia and Kuwait Re have in place risk management frameworks considered appropriate for their specific risk profiles, Al Ahleia is still developing a comprehensive group-wide ERM framework. As the group’s risk profile continues to develop, it will become increasingly important for Al Ahleia to enhance its ERM capabilities, particularly in areas such as capital management and market risk.
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Source: AM Best