AM Best has assigned a Financial Strength Rating of A- (Excellent) and a Long-Term Issuer Credit Rating of “a-” (Excellent) to KFH Takaful Insurance Company K.S.C. (Closed) (KFH Takaful) (Kuwait). The outlook assigned to these Credit Ratings (ratings) is stable.

The ratings reflect KFH Takaful’s balance sheet strength, which AM Best assesses as very strong, as well as its strong operating performance, limited business profile and appropriate enterprise risk management. In addition, the ratings factor in rating enhancement from KFH Takaful’s ultimate parent, Kuwait Finance House K.S.C.P. (KFH), reflecting the company’s strategic importance to KFH.

KFH Takaful operates under a Mudaraba model, in which the shareholders’ fund manages the takaful operations and shares in the policyholders’ investment and underwriting results based on an approved 50% Mudarib share. AM Best assesses the company’s risk-adjusted capitalisation on a combined basis, including its policyholders’ and shareholders’ funds, due to the requirement that the shareholders’ fund has to support the policyholders’ funds if it falls into a deficit.

KFH Takaful’s balance sheet strength is underpinned by its risk-adjusted capitalisation that is comfortably at the strongest level, as measured by Best’s Capital Adequacy Ratio (BCAR). AM Best expects KFH Takaful to maintain healthy capital buffers in excess of the strongest threshold as it continues its strategic growth plans, supported by good earnings retention and a conservative investment allocation. Offsetting rating factors include the company’s small capital base by international standards, as well as its high dependence on reinsurance, though this is partly mitigated by a reinsurance panel of sound credit quality.

KFH Takaful has demonstrated a track record of robust profitability, evidenced in 2025 by a consolidated return-on-equity ratio of 17.7% (2024: 22.0%). Underwriting performance has been strong, demonstrated by net/net combined ratios typically in the low 90s over the past five years (2021-2025), albeit subject to some volatility. AM Best expects KFH Takaful’s investment income to remain a modest but steady contributor toward overall earnings.

KFH Takaful maintains an established position in its domestic market of Kuwait, being a leading Takaful insurer. The company writes a diverse portfolio of business in Kuwait, where its profile is concentrated to motor and medical on a net basis. Approximately half of the company’s business is sourced from KFH and its subsidiaries, which provides a relatively stable source of premium income.

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AM Best is a global credit rating agency, news publisher and data analytics provider specialising in the insurance industry. Headquartered in the United States, the company does business in over 100 countries with regional offices in London, Amsterdam, Dubai, Hong Kong, Singapore and Mexico City. For more information, visit www.ambest.com.