Moody’s upgrades MEDGULF’s IFSR to "Ba1"; changes outlook to positive

Logo of Mediterranean and Gulf Cooperative Insurance and Reinsurance Co.

The Mediterranean and Gulf Cooperative Insurance and Reinsurance Co. (MEDGULF) announced that Moody’s Investor Service upgraded its insurance financial strength rating (IFSR) to "Ba1" from "B1", according to a bourse statement.

The rating agency also changed its outlook for the insurer from "under review" to "positive".

The rating reflects the company's strong market position and brand, as the fourth-largest player in Saudi Arabia, with a 6.7% market share in terms of gross premium written in 2020, and an established brand, particularly for medical insurance.

In addition, the rating shows MEDGULF's good asset quality, driven by a conservative investment strategy as evidenced by a low high-risk assets (HRA) ratio as a percentage of consolidated shareholders' and policyholders' equity of 44.9% in 2020.

Moody’s expects the ratio to improve to below 40% in 2021.

The rating also shows the low reserving risk, reflecting the predominance of short tail business in MEDGULF's business mix.

However, these strengths are partially offset by the company's concentration on the most competitive lines of the local motor and medical insurance.