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Rating Action:

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

15 July 2021


DIFC - Dubai , July 15, 2021 – Moody's Investors Service ("Moody's") has affirmed the Aa3 insurance financial strength rating (IFSR) of The Islamic Corporation for the Insurance of Investment and Export Credit (ICIEC) with a stable outlook.

RATINGS RATIONALE

The rating affirmation reflects ICIEC's improvements in the stand-alone fundamentals as well as the continued support stemming from its shareholders, the Islamic Development Bank (IsDB, Aaa stable) and multiple sovereign members of the Organisation of the Islamic Cooperation (OIC).

The stand-alone credit quality of ICIEC has strengthened over the past couple of years and is supported by its expanding 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 remains strong with a highly liquid invested assets portfolio and high risk assets representing only 9.1% of the corporation's consolidated (shareholders' and policyholders') equity at YE 2020. Furthermore, despite the growth in business over the past few years, the corporation maintained strong levels of capital adequacy with Net Total Exposure to Shareholders' Equity of 3.8x. ICIEC also gradually enhanced its risk management.

ICIEC's profitability was resilient in 2020, with a combined ratio of 43.7% and net income of Islamic Dinar 6.2 million in 2020 which, despite the pressures from the coronavirus pandemic, remained relatively similar to 2019's combined ratio of 39.9% and net income of Islamic Dinar 6.6 million (all on a Moody's basis). Profitability benefitted from enhanced business coverage and reduced risk and business/client concentrations, as well as from efficiency gains.

ICIEC's rating also benefits from the support from its main shareholders, in particular IsDB and the Government of Saudi Arabia (A1 negative). Given ICIEC's key role as facilitator of trade between many countries, Moody's expects that the shareholders will very likely support the corporation in times of financial distress. IsDB holds 50.6% of ICIEC's subscribed shares as at H1 2021 whilst ICIEC's other shareholders / members include Saudi Arabia and other sovereign members of the OIC. In addition, as a member of the IsDB Group, ICIEC benefits from various managerial synergies and support from its parent.

These strengths are partly offset by a significant exposure to geo-political risks.

OUTLOOK

The stable rating outlook reflects Moody's expectation that ICIEC will continue to enhance its risk management enabling it to maintain its strong levels of capital, asset quality and the recent improvements of profitability. Moody's expects ICIEC to continue to grow and diversify its business with underwriting discipline.

FACTORS THAT COULD LEAD TO AN UPGRADE OR DOWNGRADE OF THE RATING

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 corporation's asset risk and insurance risk profile.

AFFECTED RATING

..Issuer: ICIEC

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 Methodology published in November 2019 and available at https://www.moodys.com/researchdocumentcontentpage.aspx?docid=PBC_1187570 . Alternatively, please see the Rating Methodologies page on www.moodys.com for a copy of this methodology.

REGULATORY DISCLOSURES

For further specification of Moody's key rating assumptions and sensitivity analysis, see the sections Methodology Assumptions and Sensitivity to Assumptions in the disclosure form. Moody's Rating Symbols and Definitions can be found at: https://www.moodys.com/researchdocumentcontentpage.aspx?docid=PBC_79004 .

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.

The rating has been disclosed to the rated entity or its designated agent(s) and issued with no amendment resulting from that disclosure.

This rating is solicited. Please refer to Moody's Policy for Designating and Assigning Unsolicited Credit Ratings available on its website www.moodys.com.

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

Moody's general principles for assessing environmental, social and governance (ESG) risks in our credit analysis can be found at http://www.moodys.com/researchdocumentcontentpage.aspx?docid=PBC_1288435 .

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
Vice President - Senior 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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