Moody’s A3 rating indicates that the company is in the upper-medium grade with low credit risk Al-Etihad offers various commercial and personal insurance products RIYADH: Saudi-based Al-Etihad Cooperative Insurance Co. has been awarded an A3 financial strength rating by Moody’s, reflecting the firm’s strong market position in the Kingdom. Moody’s attributed the A3 rating to Al-Etihad’s solid asset quality, strong capital adequacy, and relatively low volume of high-risk assets. Al-Etihad, a mid-tier property and casualty insurer, offers various commercial and personal insurance products. Moody’s A3 rating indicates that the company is in the upper-medium grade with low credit risk and a high ability to repay short-term debts. “The stable rating outlook reflects our expectation that Al-Etihad will grow its business while maintaining underwriting discipline, as well as maintain its strong capital adequacy,” said Moody’s. It added: “However, these strengths are partially offset by Al-Etihad’s concentration to the Saudi insurance market, which has an elevated level of competition as well as Al-Etihad’s concentration to motor and medical insurance, which are the Saudi insurance market’s most competitive lines of business.” The report also highlighted the areas Al-Etihad should concentrate on to continue its key position in the Kingdom’s insurance industry. “In addition, while the insurer has a good position in the Saudi market, it is smaller than similarly rated peers and will need to balance underwriting discipline with business volume growth as it keeps pace with larger peers in a consolidating market,” said the US-based agency. Moody’s assessment also incorporates Al-Etihad’s environmental, social, and governance considerations, following its general principles for evaluating ESG risks. “Our assessment is that Al-Etihad’s exposure to governance risks is low, reflected in a Governance Issuer Profile Score of G-2, supported by conservative financial strategy and risk management, credible and experienced management,” added the credit-rating agency. In a separate Tadawul statement, Al-Etihad highlighted that the A3 rating reflects its strong profitability over the past five years, bolstered by a good return on capital and a favorable combined loss ratio. In March, the company reported a 639.22 percent increase in net profit for 2023, reaching SR93.89 million ($25.02 million) compared to the previous year, attributed to higher insurance revenues, particularly in motor insurance. Al-Etihad’s focus on maintaining underwriting discipline and balancing growth with risk management will be crucial as it continues to navigate a consolidating market.