A.M. Best Assigns Ratings to Al Fajer Retakaful Insurance Company KSCC

Jun 29, 2008

OLDWICK, N.J., JUNE 30, 2008
A.M. Best Co. has assigned a financial strength rating (FSR) of A- (Excellent) and an issuer credit rating (ICR) of "a-" to Al Fajer Retakaful Insurance Company KSCC (Al Fajer Re) (Kuwait). The outlook on both ratings is stable.

The ratings reflect the company's excellent projected risk-adjusted capitalization on a combined basis and the well capitalized retakaful fund, in addition to the regionally experienced management team. Partially offsetting factors are the execution risk of the business plan associated with a start-up company and the competition levels in the Middle East and South East Asia.

Al Fajer Re provides Sharia' compliant reinsurance protection, predominantly on a treaty basis, to non-life risks with a projected business income of approximately KWD 10 million (USD 38 million) in March 2009, which is expected to grow to approximately KWD 28 million (USD 104 million) by 2011.

A.M Best believes that Al Fajer Re's projected risk-adjusted capitalisation on a combined basis (shareholders and retakaful funds) is likely to be excellent. A.M. Best also expects the risk-adjusted capital position for the policyholders or retakaful fund to be supportive of Al Fajer Re's forecast premiums growth over the next three to five years, given the Qard' Hassan (interest free loan) of KWD 25 million (USD 95 million) available to the policyholders' fund from the shareholders' fund through a trust deed. Moreover, Al Fajer Re's investment strategy is expected to be very conservative with the vast majority of assets being held in cash deposits (murabahas). Al Fajer Re also benefits from a management team well experienced in the Middle East and Far East region, with excellent underwriting expertise and established relationships with companies and brokers internationally, in addition to the strong and reputable regional shareholders.

For Best's Ratings, an overview of the rating process and rating methodologies, please visit Best's Rating Center.

Founded in 1899, A.M. Best Company is a global full-service credit rating organization dedicated to serving the financial and health care service industries, including insurance companies, banks, hospitals and health care system providers.