Standard & Poor's has assigned initial insurer financial strength and counterparty credit ratings of BBB+ to Saudi Re for Cooperative Reinsurance Co. (Saudi Re), which is based in Saudi Arabia (KSA). The outlook on the ratings is stable. Saudi Re is a start-up reinsurance company based in Riyadh. It was listed on the Riyadh Tadawul stock exchange in March 2008, and began actual underwriting in August 2008. Its strategy is to diversify its exposures by initially focusing on proportional treaty business in Saudi Arabia, as well as elsewhere in the Middle East and North Africa, while also selectively writing facultative risks across the region. The newly assigned ratings reflect the company's expert and influential management team, its broadly based and supportive shareholders, its strong paid up capitalization of SR1 billion ($267 million), and the potential that the new company enjoys for rapid, sustainable growth, particularly in Saudi Arabia but also in neighboring GCC, Middle Eastern, and North African reinsurance markets. Standard & Poor's also takes comfort from the close and effective scrutiny of the local insurance and reinsurance marketplaces by the Saudi Arabian Monetary Agency. “The main offsetting weakness in the Saudi Re analysis is inevitably the lack of track record, and it remains to be seen to what extent the new company will succeed in establishing a strong, sustainable competitive position while maintaining appropriate pricing and margins sufficient to generate strong profitability,” said S&Poor's analyst David Anthony.
