Islamic Arab Insurance Co. (P.S.C.) - SALAMA

The stable outlook reflects our opinion that SALAMA will continue to improve its operating performance while keeping its capital adequacy and liquidity at current levels. We also expect that SALAMA's exposure to North African insurance markets will decline over the coming two years. We could consider a downgrade over the next two years if, contrary to our expectations: SALAMA's capital adequacy and liquidity deteriorates because of significant growth in premiums or technical reserves, or due to underwriting or investment losses. SALAMA's exposure to high-risk countries, in terms of its invested assets and premiums, increases from current levels. We could consider an upgrade over the next two years if SALAMA continues to improve the credit quality of its investment portfolio for

...S&P Global Ratings expects SALAMA to maintain its capital adequacy in excess of the '###' level, as per our capital model. SALAMA's '###' level risk-based capital adequacy has been a key strength for the rating, but this is moderated by the small absolute size of capital in global terms. We expect SALAMA to maintain capital at the '###' level by retaining the majority of its profits over the next two years. We expect SALAMA to expand its United Arab Emirates (UAE) business further, while gradually decreasing its exposure to North African Countries. In 2016-2017, SALAMA discontinued some loss-making UAE motor accounts, which resulted in increased exposure to countries with higher industry and country risk. Since 2018, the company has witnessed impressive growth in its UAE portfolio, which now forms about 75% of gross written premiums (GWPs). We expect SALAMA to expand its UAE business further and gradually reduce its exposure to other high-risk markets. The company's historical volatility...

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