S&P Assigns ‘BBB’ Rating to Kuwait Re

June 1, 2004

Standard & Poor’s Ratings Services announced that it has assigned its “BBB” long-term counterparty credit and insurer financial strength ratings to Kuwait Reinsurance Co. K.S.C. (KR), with a stable outlook.

“The ratings reflect KR’s very strong capitalization and strong investments, partially offset by its weak underwriting performance and marginal competitive position,” stated S&P credit analyst Nigel Bond. KR is essentially a non-life reinsurer with gross premiums written of about $19 million.

“The stable outlook reflects Standard & Poor’s expectation that capitalization will remain very strong, driven principally by a falling, but still excellent, capital adequacy ratio,” Bond added. Investments are also expected to remain strong, although the market risk of the investment portfolio will rise slightly as the equity and property proportions of the portfolio increase.

S&P said it expects underwriting performance to improve, “largely due to expense leverage, meaning that the net combined ratio will be about 105 percent in 2004 compared with 116 percent in 2003.” The rating agency also noted that it “expects Transatlantic Reinsurance Co. (TR; AA/Stable/–) to remain the largest shareholder in KR. Any change in TR’s 40 percent ownership is likely to lead to a review of the ratings.”

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