Saudi Re assigned ‘A3’ financial strength rating by Moody’s

Saudi Re For Cooperative Reinsurance Co. was assigned an “A3” insurance financial strength rating (IFSR) by Moody's Investors Service, with stable outlook, the company said in a statement.

The rating reflects the insurer’s strong brand and market position in the Kingdom, being the sole Saudi professional reinsurer and also thanks to its growing presence in its target markets of Asia, Africa and Lloyd's.

Saudi Re’s preferential position in the local market due to a right of first refusal on a portion of premiums ceded by primary carriers in the Saudi market, strong asset quality, good capital adequacy and strong financial flexibility were also taken into account.

“Saudi Re's business mix is well-diversified by line of business, spread across property, short-tail casualty and specialty, with a modest amount of life and health business. Its product risk is moderate, given the predominance of short-to-medium tail business, and limited natural catastrophe exposure,” the rating agency said.

The stable outlook reflects Moody’s expectation that Saudi Re will maintain its recent improvements in profitability whilst maintaining its strong assets quality, capital adequacy and adequate level of reserves.

Meanwhile, negative rating pressure could result from a reversal of the company’s recent improvements in profitability with average combined ratio consistently at or above 100 percent, and/ or sustained deterioration in regulatory or economic capitalization, and/ or meaningful reduction in the extent or quality of its retrocessional protection; and/ or significant deterioration in asset quality along with deterioration in financial flexibility with financial leverage in excess of 15 percent.

“The rating will enhance client, partner and shareholder confidence in the company. It will also support its competitive position and contribute to its growth in global markets,” Fahad Al-Hesni, Saudi Re’s chief executive officer and managing director, said.