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Saturday, November 14 - 2009

Bahrain Kuwait Insurance Co. BSC outlook to positive following outlook revision on parent

Standard & Poor's Ratings Services said it revised its outlook on Bahrain-based insurer Bahrain Kuwait Insurance Co. BSC (BKIC) to positive from stable, following an outlook revision on its parent, Gulf Insurance Co. KSC.

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At the same time, Standard & Poor's affirmed its 'BBB' long-term counterparty credit and insurer financial strength ratings on the company.

The ratings reflect BKIC's strategic importance to Gulf Insurance (BBB+/Positive/--), strong capitalization, and strong earnings. These positive factors are offset by BKIC's constrained competitive position and high reliance on reinsurers.

"The positive outlook on BKIC reflects the positive outlook on Gulf Insurance and BKIC's strategic importance to Gulf Insurance," said Standard & Poor's credit analyst Ali Karakuyu. BKIC is expected to retain its association and working relationship with Gulf Insurance.

Standard & Poor's expects BKIC's capitalization to remain strong, and the combined ratio not to deteriorate beyond 90%. Standard & Poor's also expects BKIC to maintain and defend its competitive position without materially compromising on profitability, or undertaking new initiatives that would significantly increase the risk profile of the company.

The ratings may be raised in response to any upward revision of the ratings of Gulf Insurance. Positive rating action may reflect further strengthening of BKIC's relationship with Gulf Insurance through increased business volume, accompanied by maintained earnings and capital strength.

Negative rating action would result from any deterioration in BKIC's strategic importance to Gulf Insurance. Equally, any deterioration in capitalization, earnings, or competitive position could also put downward pressure on the ratings.
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Notes and media contacts

Analyst Contacts:

Ali Karakuyu, London
Kevin Willis, London
Isobel McCalman, London
Insurance Ratings Europe

Press Office Contacts:

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Standard & Poor's, a division of The McGraw-Hill Companies (NYSE:MHP), is the world's foremost provider of financial market intelligence, including independent credit ratings, indices, risk evaluation, investment research and data. With approximately 8,500 employees, including wholly owned affiliates, located in 21 countries. Standard & Poor's is an essential part of the world's financial infrastructure and has played a leading role for more than 140 years in providing investors with the independent benchmarks they need to feel more confident about their investment and financial decisions.

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