Mubasher: Moody's Investors Service has upgraded, on Monday, the insurance financial strength rating (IFSR) of KFH Takaful Insurance Company to ‘Baa2’ from ‘Baa3’, with a ‘Stable’ outlook.
This upgraded rating reflects the company’s improved levels of capitalisation following the KWD 5 million capital injection in 2015 resulting in a consolidated equity which represented 42.6% of overall assets in 2015, according to a recent report.
It also reflects “improved asset quality with the capital proceeds predominantly invested in high rated bank deposits translating in the high risk assets (HRA) equating to 30.0% of consolidated equity at YE 2015 (from 49.4% at YE 2014); and KFH Takaful's continued growth whilst maintaining underwriting profitability with an average combined ratio (COR) of 97% between 2011-2015 which has helped convert both shareholders' and policyholders' accumulated earnings to a surplus from a deficit position.”
With an overall market share of 3.6%, KFH Takaful is ranked as the second largest takaful and the sixth largest overall insurer in the Kuwaiti market, Moody’s said in the report.
Moody’s noted that the company’s total premiums rely on the business written with its banking parent, Kuwait Finance House (KFH), as 75% of KFH Takaful's 2015 gross premiums written were sourced from the KFH and furthermore the insurer relies on its parent for most of its distribution.
The KWD 5 million injected capital followed the change of the name to KFH Takaful Insurance Company from Al Muthanna Takaful Insurance Company in January 2015, the report added.
“The increased capital has also improved overall asset quality with majority of the proceeds invested in, and expected to be maintained in, high rated bank deposits,” the report said.
