Kuwait Reinsurance Co. outlook to positive; operating performance expected to improve

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 Kuwait Re's very strong capitalization, enhanced risk management and strategy, and strong investments, partially offset by its historic underwriting performance and adequate competitive position.

Standard & Poor's expects that the company's improved underwriting performance will be maintained at sub-100% combined ratio levels for 2008 and 2009.

Positive momentum in rating has also been achieved by the increasingly technical approach taken to underwriting, driven by the recent management changes.

Capitalization should remain at least strong, driven principally by an excellent (although falling) capital surplus at the 'AAA' level. Investments and liquidity are also expected to remain strong.

"If Kuwait Re achieves its targets and establishes a track record of underwriting profitability across the rating horizon, then the ratings could be raised to 'BBB+',"

said Standard & Poor's credit analyst Matthew Day.

"Failure to successfully improve underwriting profitability, or a negative shift in the competitive environment for Kuwait Re, could put downward pressure on the ratings," he added.