Moody's Investors Service affirmed Al Ahleia's Insurance Company at A3 insurance financial strength rating (IFSR) and changed the outlook to negative from stable, after Al Ahleia made a bid in July for Kuwait Reinsurance Company, offering about KWD18.4 million ($60.8 million) for a 61.27% stake.

Moody's said that Al Ahleia's purchase of Kuwait Reinsurance will have a negative impact on Al Ahleia's capital position and financial flexibility.

Al Ahleia paid nearly KWD18.4 million to acquire the additional 61.27% stake in Kuwait Reinsurance, financed through borrowing and cash, said Moody's.

The borrowings will increase leverage to around 20% from Al Ahleia's current unlevered financial profile. However, Moody's expects that the insurer will revert to its unlevered status in the short to medium term as it settles the borrowings through operational surpluses.