Kuwait: Moody's affirms Gulf Takaful's Ba1 IFSR rating with stable outlook
Source: Middle East Insurance Review | Mar 2015
Moody’s has affirmed the Ba1 insurance financial strength rating (IFSR) of Kuwait-based Gulf Takaful Insurance Company. The rating outlook is stable.
The rating affirmation reflects the good market position of Gulf Takaful in the Kuwaiti takaful insurance market, good product mix and distribution strategy. These strengths are tempered by the negative policyholders’ funds and the significant level of high-risk assets.
Profitability has been historically weak although it has more recently improved, with the company reporting an underwriting profit in 2013.
The stable outlook reflects Gulf Takaful’s healthy position in the Kuwaiti takaful market. It also reflects Moody’s expectation that the Kuwaiti insurance market will remain competitive, but that Gulf Takaful’s future performance will improve relative to the weaker results of 2012.
According to Moody’s, the rating could be upgraded if there is a greater diversification in the investment portfolio away from unlisted equities and into more credit-worthy asset classes, and/or there are improvements in the underwriting profitability and policyholders’ deficit with combined ratios consistently below 95%.
Conversely, the rating may come under negative pressure if there is a deterioration in the underwriting as well as overall profitability, with the combined ratio consistently exceeding 110%; there are significant further impairments on the asset portfolio; and/or there is increased price competition within Kuwait’s insurance market threatening Gulf Takaful’s market position.
Gulf Takaful was established in 2004. It writes a broad mix of non-life, takaful life and medical insurance.