Growth potential offset by lack of track record

Standard & Poor's gave initial insurer financial strength and counterparty credit ratings of BBB+ to Saudi Re, a start-up reinsurance company based in Riyad, Saudi Arabia. S&P's outlook on the ratings is stable.

Saudi Re was listed on the Riyadh Tadawul stock exchange in March 2008, and began actual underwriting in August 2008. It is initially focusing on proportional treaty business in Saudi Arabia, as well as elsewhere in the Middle East and North Africa. It also writes some facultative risks across the region.

Saudi Re has a paid up capitalisation of Saudi riyals (SAR) 1bn ($267m), and enjoys strong growth prospects in the region.

"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 Standard & Poor's credit analyst David Anthony.

"Saudi Re is nevertheless expected to enjoy immediate competitive strengths in its home market and attractive potential to develop its operations elsewhere within the GCC region and the wider Arab and Islamic world beyond."