Moody’s affirms Walaa’s A3 IFSR rating, upgrades outlook to stable

Logo of Walaa Cooperative Insurance Co.

Moody’s Investors Service affirmed the “A3” insurance financial strength rating (IFSR) of Walaa Cooperative Insurance Co. (Walaa) and changed the outlook to “stable” from “negative”, the company said in a bourse filing today, May 2, 2021.

According to the credit opinion announced on April 29, 2021, the affirmation reflected Walaa’s strong market position and brand, as the fifth-largest player in the Saudi insurance market with a 3.9% market share in terms of gross written premium (GWP) in 2020.

In addition, the rating endorsed strong asset quality, driven by a conservative investment strategy with high-risk assets as a percentage of consolidated (shareholders’ and policyholders’) equity of 31.5% at 2020-end.

The company has a strong capital adequacy level, with shareholders’ equity percentage of total assets reaching 32.2% at 2020-end, the rating agency said.

Walaa reported good profitability with a return on capital (ROC) of 6.7% in 2020, backed by a strong combined operating ratio of 88.1%, despite exposure to a fluctuation on competitive pressures in the Saudi insurance market.

However, these strengths are partially limited by the insurer’s focus on auto and health insurance, the two most competitive products in the domestic insurance market, Moody’s noted.