News, Takaful Corner

First Takaful Put On Credit Watch

Credit rating agency tracking Kuwaiti insurer’s financial performance.

First Takaful Insurance has been put on credit watch by Standard and Poors following profitability concerns.

S&P is monitoring the Kuwait-based insurer’s BBB- counterparty credit and financial strength after its annual results for 2009 “raised concerns” about future earnings.

Wolfgang Rief, S&P credit analyst, said the rating action mainly reflects the agency’s view of the “deteriorating underwriting performance of the takaful fund, poor investment results for both members and shareholders, and diminished growth in a very difficult economic and competitive environment”.

He added: “It also reflects our uncertainties about management’s strategy and measures to restore profitability and regain growth momentum.”

S&P will now ascertain more insight into how the company is responding to the challenging dynamics of the market and what strategies and measures it plans to implement to achieve improvements.

It expects to resolve the credit watch status within the next 90 days.

Rief added: “If we decide to downgrade the company, the rating change is unlikely to exceed one notch.”