AM Best has upgraded the Long-Term Issuer Credit Ratings (Long-Term ICR) of Gulf Insurance Group K.S.C.P. (GIG) and Gulf Insurance and Reinsurance Company K.S.C. (Closed) (GIG-Kuwait) from “a” (Excellent) to “a+” (Excellent), while affirming their Financial Strength Ratings of A (Excellent). Both companies are based in Kuwait, and the outlook for these ratings is stable.
The ratings reflect GIG’s robust consolidated balance sheet strength, assessed by AM Best as very strong, along with its solid operating performance, neutral business profile, and effective enterprise risk management (ERM).
GIG-Kuwait operates as a composite insurer and holds a prominent position in Kuwait’s insurance market, playing a strategically vital role within GIG’s operations.
The upgrade in Long-Term ICR is attributed to the implicit support GIG receives from its ultimate parent, Fairfax Financial Holding Limited (Fairfax) [TSX: FFH], which recently increased its ownership to 97.1%. GIG’s ratings are bolstered by the financial flexibility and substantial capital resources provided by Fairfax. Furthermore, GIG benefits from shared expertise in areas like ERM, reinsurance, actuarial services, talent acquisition, and investment management, as well as best practices in capital management.
GIG’s balance sheet strength is supported by its consolidated risk-adjusted capitalization, which is rated at the strongest level according to Best’s Capital Adequacy Ratio (BCAR). AM Best anticipates that GIG will maintain its BCAR well above the threshold for this top rating category. GIG’s balance sheet strength also relies on a comprehensive reinsurance strategy and a relatively conservative investment approach. Although the group’s balance sheet does experience moderate financial leverage and elements of country risk due to regional operations, these factors are expected to lessen over the medium term.
GIG ranks among the largest and most diversified insurance groups in the Middle East and North Africa (MENA) region, holding leading positions in key markets such as Kuwait, Jordan, Bahrain, Saudi Arabia, the United Arab Emirates, Qatar, Oman, Egypt, Turkey, and Algeria. The group has expanded its footprint across MENA through both acquisitions, such as Gulf Insurance Group (Gulf) B.S.C. (c) in 2021, and organic growth, reporting insurance service revenue of KWD 0.82 billion (USD 2.7 billion) in 2023.
On September 12, 2024, the Kuwait Ministry of Health informed GIG of the immediate revocation of its health insurance contract for retired citizens (AFYA). This significant insurance scheme is expected to result in flat gross written premiums for 2024, with a potential decline in 2025. Nonetheless, GIG is well-positioned to manage the financial impact of this change.
The group has demonstrated a strong record of operating performance, posting post-tax profits of KWD 29.5 million (USD 96.3 million) in 2023, which corresponds to a return on equity of 8.0%, as reported by AM Best. The positive earnings were attributed to favorable underwriting and investment results, with a net investment return of 5.4%, despite a KWD 10.8 million impairment on an investment. GIG also reported strong results for the first half of 2024, with post-tax profits reaching KWD 18.9 million.
This press release pertains to Credit Ratings that are available on AM Best’s website. For comprehensive rating information related to this release and pertinent disclosures, including details of the responsible office for each rating, please refer to AM Best’s Recent Rating Activity web page. For more information about the usage and limitations of Credit Rating opinions, consult the Guide to Best’s Credit Ratings. Additionally, details on the proper use of Best’s Credit Ratings, Performance Assessments, Preliminary Credit Assessments, and AM Best press releases can be found in the Guide to Proper Use of Best’s Ratings & Assessments.
