The review for downgrade reflects governance risks and deterioration in the company’s business profile and profits. Despite the drop in gross written premiums which led to decline in Buruj’s previously strong profitability, Moody’s assured that Buruj’s capital, technical reserves and liquidity buffers remain strong and are sufficient to absorb such declines in profitability for a few months. Positively the board of directors has been active to ensure that the company continues to operate as normal in the fields of customer and claims servicing.

Given the review for downgrade, there is limited upward pressure on the rating. Moody’s could

confirm the rating at its current rating level if it concluded that the management actions were

sufficient to reinstate Buruj’s business profile and profitability in the next six months.

Conversely, Buruj’s rating would be downgraded if: (i) there is a sustained reduction in market share; and/or (ii) its capital position deteriorates, with significant deterioration in its regulatory capital or gross underwriting leverage increasing to over 3x, or if the credit quality of its reinsurance panel deteriorates; and/or (iii) there is sustained deterioration in the underwriting performance, as evidenced by a combined ratio (COR) of 100% or above for next couple of quarters; and/or (iv) there is a deterioration in invested asset quality with high risk assets (HRA) equating to over 100% of consolidated (shareholders' and policyholders') equity.