Moody's assigns first-time IFSR of Aa3 to ICIEC; stable outlook

The rating outlook is stable.

The Corporation was established in 1994 at Jeddah, Saudi Arabia. ICIEC provides export credit insurance and re-insurance for exports emanating from its member countries, to anywhere in the world, to cover the non-payment of export receivables resulting from commercial or non commercial risks.

It also provides investment insurance for foreign investment flows into its member countries, irrespective of their country of origin, against country risks, mainly the risks of exchange transfer restrictions, expropriation, war and civil disturbance and breach of contract by the host government.

ICIEC is a member of the Islamic Development Bank Group (IDB, rated Aaa by Moody's), which holds 51% of ICIEC's issued shares through its waqf fund, a special fund established by IDB.

ICIEC's other shareholders/members include the sovereign members of the IDB Group, including Saudi Arabia (over 13% direct shareholding) and other sovereign members of the Organisation of the Islamic Conference.

Moody's notes that ICIEC's rating reflects both the stand-alone fundamentals as well as potential support from its shareholders/IDB Group member countries.

Thus, despite the absence of explicit guarantees, in the context of its key role as facilitator of trade between Islamic countries, ICIEC's rating reflects the strong ability and potentially high willingness of ICIEC's main ultimate shareholders, and in particular Saudi Arabia, (A1 Positive) and other GCC countries, to support the company in times of financial distress.

Furthermore, the rating reflects ICIEC's legal structure and business nature, as the only multilateral export credit and investment insurance Corporation in the world that provides Shariah-compatible insurance and reinsurance products, as well as its enhanced regional knowledge based on its experience by operating in the region.

Moody's also notes that as a member of the IDB Group, ICIEC benefits from various managerial synergies and support.

Moody's notes ICIEC's main challenges are i) to improve and manage stand-alone capitalisation levels in the context of growth opportunities ii) to enhance business coverage and reduce risk and business concentrations iii) to optimise and improve the level of efficiency of the organisation and the underwriting process and iv) to optimise production of distribution networks.

Moody's added that upward rating pressure may evolve over time from 1) a significant upgrade of the long-term ratings of ICIEC's main
shareholders/member countries, and in particular Saudi Arabia's ratings moving above Aa3 levels and/or 2) a significant strengthening in ICIEC's ownership structure and/or level of support from member countries.

On the other hand, the rating may experience downward pressure from 1) a downgrade of some of ICIEC's main shareholders/member countries, and in particular Saudi Arabia's ratings moving to below A1 levels 2) significant deterioration in ICIEC's ownership structure and/or level of support from member countries 3) material increase in ICIEC's risk profile due to significant deterioration of current capitalisation and/or material increase in the company's asset risk and insurance risk
profile.

ICIEC uses Islamic Dinar (ID) as its unit of account, which is equal to the Special Drawing Right (SDR) of the International Monetary Fund.

It follows a Hijri financial year, with the latest year (1428H) closing on 9 January, 2008.

The Corporation had Shareholders' Equity of ID97.1m and Total Assets of ID103.8m as of 09 January, 2008 (end of 1428H). At the year-end 1428H, it reported a Net Income of ID5.2m.