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Rating Action:

Moody’s affirms ICIEC's Aa3 IFS Rating; stable outlook

 The document has been translated in other languages

01 October 2019

DIFC - Dubai , October 1, 2019 – Moody's Investors Service has affirmed the Aa3 insurance financial strength rating (IFSR) of The Islamic Corporation for the Insurance of Investment and Export Credit (ICIEC). The outlook is maintained at stable.

RATINGS RATIONALE

The rating affirmation reflects ICIEC's stand-alone fundamentals as well as the support stemming from its shareholders, the Islamic Development Bank (IsDB, Aaa stable) and multiple sovereigns. Given ICIEC's key role as facilitator of trade between many countries, Moody's expects that its main shareholders, in particular IsDB and Saudi Arabia (A1 stable), will very likely support the company in times of financial distress. In addition, as a member of the IsDB Group, ICIEC benefits from various managerial synergies and support from its parent. ICIEC's subscribed capital has almost doubled in seven years, increasing to ID288 million at YE 2018 from ID149 million at YE 1432H (25 November 2011) whilst called capital increased to ID144 million from ID75 million in the same period.

ICIEC is a member of the IsDB Group, which holds 50.7% of ICIEC's subscribed shares as at H1 2019. ICIEC's other shareholders/members include Saudi Arabia and other sovereign members of the Organisation of the Islamic Cooperation (OIC).

The stand-alone credit quality of ICIEC is supported by its role as the leading multilateral export credit and investment insurance corporation in the world that provides Shariah-compliant insurance and reinsurance products, as well as its enhanced regional knowledge based on its experience by operating in the OIC Member Countries. Asset quality is strong with a highly liquid invested assets portfolio and high risk assets representing only 12.9% of the company's consolidated (shareholders and policyholders) equity at YE 2018. These strengths are partly offset by a significant exposure to geo-political risks. Furthermore profitability has been weak, as evidenced by the five-year average combined ratio of 122.9% as at YE 2018, despite recent improvements (from 130.9% as at YE 2017) driven by steady growth in premiums and expense efficiency.

According to Moody's, ICIEC's main challenges are (i) to further improve and manage stand-alone capitalisation levels in the context of growth opportunities and the level of geo-political risk in some of its markets, (ii) to enhance business coverage and reduce risk and business/client concentrations, (iii) to continue to optimise and improve the level of efficiency of the corporation and the underwriting process and (iv) to continue to optimise the production of distribution networks.

WHAT COULD CHANGE THE RATING UP/DOWN

Upward rating pressure for ICIEC may arise over time in case of (i) a multi-notch upgrade of the long-term ratings of ICIEC's main shareholders/member countries, and/or (ii) a significant strengthening in ICIEC's ownership structure and/or level of support from members and in particular of IsDB.

Conversely, the rating may experience downward pressure in case of (i) a downgrade of some of ICIEC's main shareholders/member countries, in particular IsDB as well as Saudi Arabia's rating moving to below A1 level, and/or (ii) significant reduction in ownership and/or level of support from IsDB, and/or (iii) a material increase in ICIEC's risk profile due to significant deterioration of current capitalisation and/ or a material increase in the company's asset risk and insurance risk profile.

AFFECTED RATINGS

..Issuer: The Islamic Corporation for the Insurance of Investment and Export Credit

Affirmation:

....Insurance Financial Strength Rating, Affirmed Aa3

Outlook

....Outlook maintained at Stable

PRINCIPAL METHODOLOGY

The principal methodology used in this rating was Trade Credit Insurers published in May 2018. Please see the Rating Methodologies page on www.moodys.com for a copy of this methodology.

REGULATORY DISCLOSURES

For ratings issued on a program, series, category/class of debt or security this announcement provides certain regulatory disclosures in relation to each rating of a subsequently issued bond or note of the same series, category/class of debt, security or pursuant to a program for which the ratings are derived exclusively from existing ratings in accordance with Moody's rating practices. For ratings issued on a support provider, this announcement provides certain regulatory disclosures in relation to the credit rating action on the support provider and in relation to each particular credit rating action for securities that derive their credit ratings from the support provider's credit rating. For provisional ratings, this announcement provides certain regulatory disclosures in relation to the provisional rating assigned, and in relation to a definitive rating that may be assigned subsequent to the final issuance of the debt, in each case where the transaction structure and terms have not changed prior to the assignment of the definitive rating in a manner that would have affected the rating. For further information please see the ratings tab on the issuer/entity page for the respective issuer on www.moodys.com.

For any affected securities or rated entities receiving direct credit support from the primary entity(ies) of this credit rating action, and whose ratings may change as a result of this credit rating action, the associated regulatory disclosures will be those of the guarantor entity. Exceptions to this approach exist for the following disclosures, if applicable to jurisdiction: Ancillary Services, Disclosure to rated entity, Disclosure from rated entity.

Regulatory disclosures contained in this press release apply to the credit rating and, if applicable, the related rating outlook or rating review.

Please see www.moodys.com for any updates on changes to the lead rating analyst and to the Moody's legal entity that has issued the rating.

Please see the ratings tab on the issuer/entity page on www.moodys.com for additional regulatory disclosures for each credit rating.

Mohammed Ali Londe
AVP-Analyst
Financial Institutions Group
Moody's Investors Service Middle East Limited
Regulated by the DFSA
Gate Precinct 3, Level 3
P.O. Box 506845
DIFC - Dubai
UAE
JOURNALISTS : 44 20 7772 5456
Client Service : 44 20 7772 5454

Benjamin Serra
Senior Vice President
Financial Institutions Group
JOURNALISTS : 44 20 7772 5456
Client Service : 44 20 7772 5454

Releasing Office :
Moody's Investors Service Middle East Limited
Regulated by the DFSA
Gate Precinct 3, Level 3
P.O. Box 506845
DIFC - Dubai
UAE
JOURNALISTS : 44 20 7772 5456
Client Service : 44 20 7772 5454

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