LONDON–(BUSINESS WIRE)–AM Best has affirmed the Financial Strength Rating of A-
(Excellent) and the Long-Term Issuer Credit Rating of “a-” of Al Ahleia
Insurance Company S.A.K.P. (Al Ahleia) (Kuwait). The outlook of these
Credit Ratings (ratings) remains stable.

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

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 Kuwait
Re, but remain robust, demonstrated by a combined ratio of 96.2% in
2018. Prospective consolidated earnings are expected to reflect the
continued excellent performance of Al Ahleia’s direct insurance
operations, as well as the benefits of strategic decisions implemented
by Kuwait Re to improve the profitability of its reinsurance portfolio.

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
Middle East and North Africa, Asia-Pacific and Central and Eastern
Europe. On a consolidated basis, the Al Ahleia group wrote gross
premiums of KWD 84.0 million in 2018, with Kuwait Re contributing KWD
44.2 million.

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.

This press release relates to Credit Ratings that have been published
on AM Best’s website. For all rating information relating to the release
and pertinent disclosures, including details of the office responsible
for issuing each of the individual ratings referenced in this release,
please see AM Best’s
Rating Activity
web page. For additional information
regarding the use and limitations of Credit Rating opinions, please view
Best’s Credit Ratings
. For information on the proper media
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William Keen-Tomlinson, ACA
Financial Analyst
+44 20 7397 4395
[email protected]

Salman Siddiqui
Associate Director, Analytics
+44 20 7397 0331
[email protected]

Christopher Sharkey
Manager, Public Relations
+1 908 439 2200,
ext. 5159
[email protected]

Jim Peavy
Director, Public Relations
+1 908 439 2200, ext. 5644
[email protected]