Kuwait-based KIB Takaful has shown a profitable financial performance, as evidenced by a three-year average net income return on equity of 8%, and mainly driven by good underwriting returns, says Fitch Ratings.
Underwriting profitability improved in 2024-2025 when KIB Takaful decided to drastically reduce its motor book. As a result, the combined ratio improved to 58% in 2025 from 113% in 2023.
Fitch has assigned KIB Takaful Insurance Co an Insurer Financial Strength (IFS) Rating of 'A' with a ‘Stable’ outlook.
KIB Takaful's rating benefits from a five-notch uplift from its standalone credit quality of 'bb+' due to its linkages with its majority-owner Kuwait International Bank. KIB Takaful's standalone credit quality reflects its strong capitalisation and financial performance, which offset the limited operating scale.
Apart from profitability, other factors driving KIB’s credit ratings include:
Ownership Credit-Positive: KIB Takaful's rating is aligned with KIB's Long-Term IDR, reflecting the extremely high likelihood of support from KIB. This view is supported by the bank's strong ability to provide support, the high integration of KIB Takaful's operation within the group, regulation likely to favour support of the subsidiary by the parent bank and the shared branding. This results in a five-notch uplift from its standalone credit quality of 'bb+'.
Fitch deems KIB Takaful an integral part of KIB in supporting the bank's development targets. It has strong synergies with the parent through its offer of a wide range of takaful insurance products to the banking franchise base.
Limited Operating Scale: Group Reliance: KIB Takaful is a small Kuwait-based takaful insurance company writing KWD5.2m of gross written premiums (2024: KWD:5.5m), with medical and life accounting for 75% of its insurance portfolio in 2025. Group-serviced business accounted for 70% of its insurance book based on the premiums written in 2025 and mainly represents medical insurance and credit and group life products.
Strong Capital Position: Based on Fitch's Prism score at end-2025, capitalisation was 'Extremely Strong'. The company maintains a large equity base relative to its written premium volumes, as reflected in a net insurance revenue to capital ratio of 0.2 at end-2025. KIB Takaful's solvency ratio was 147% at end-2025 based on its local regulatory requirements.
Exposure to Investment Property: KIB Takaful's investment risk, as measured by Fitch-calculated risky-asset ratio (RAR) of 83% at end-2025 (end-2024: 62%), is high. KIB Takaful is exposed to investments in real property as well as equity investments, which Fitch includes in its calculation of the RAR. Fitch expects investment risk to remain high.
Adequate Reinsurance Protection: KIB Takaful makes sizeable use of reinsurance, as reflected in a reinsurance utilisation ratio of 52% in 2025. The company's reinsurance programme incorporates a combination of quota-share and excess-of-loss treaties that cover the key lines of business. The credit quality of the reinsurance panel is good, with the majority local reinsurers, mainly from the Middle East and Africa region.