First Takaful Insurance Company (FTIC) is assessed as having marginal operating performance, reflecting the insurer's weak, albeit improving, overall profitability, indicates AM Best.
This is evidenced by FTIC’s three-year (2023-2025) weighted average combined ratio of 130% and breakeven return on equity (as calculated by AM Best).
Investment results contribute positively to its earnings with a 5.9% investment yield in 2025 (2024: 4.0%). AM Best expects overall earnings to remain skewed toward investment income, albeit subject to potential volatility given the company’s material holdings in equities.
Ratings assigned
AM Best has assigned a Financial Strength Rating of ‘B’ (Fair) and a Long-Term Issuer Credit Rating of ‘bb’ (Fair) to FTIC. The outlook assigned to these credit ratings is stable.
The ratings reflect FTIC’s balance sheet strength, which AM Best assesses as strong, as well as its marginal operating performance, limited business profile and marginal enterprise risk management (ERM).
FTIC operates under a mudarabah model, in which the shareholders’ fund manages the takaful operations and shares in the policyholders’ investment and underwriting results based on a Mudarib share of up to 50%. AM Best assesses the company’s risk-adjusted capitalisation on a combined basis, including its policyholders’ and shareholders’ funds, due to the requirement that the shareholders’ fund has to support the policyholders’ funds if it falls into a deficit.
FTIC’s balance sheet strength is underpinned by its very strong risk-adjusted capitalisation, as measured by Best’s Capital Adequacy Ratio (BCAR), based on a combined policyholder and shareholder funds basis.
The balance sheet strength assessment also factors in the KWD6m ($19.5m) capital injection made in 2026 to restore FTIC’s regulatory solvency position. AM Best expects BCAR scores to remain at the very strong level prospectively.
An offsetting factor is FTIC’s significant exposure to private equity investments and investments in affiliates, which together are equivalent to approximately half of the company’s capital and surplus. The company’s relatively small capital base in absolute terms also makes its risk-adjusted capitalisation more susceptible to potential volatility.
Business profile
AM Best assesses FTIC’s business profile as limited, reflecting its position as a niche takaful insurance company, which operates solely in the relatively small and fragmented Kuwaiti market. The company reported insurance revenue of KWD5.9m in 2025. On a net basis, FTIC has relatively limited product diversification, with medical business accounting for almost half of its net portfolio.
AM Best considers FTIC’s ERM approach to be largely at an early stage of development and predominantly driven by minimum regulatory requirements in Kuwait. FTIC implemented a formalised ERM framework, which is expected to be embedded into company’s operations and evolve together with the company’s risk profile and regulatory requirements.