FINANCIAL INSTITUTIONS CREDIT OPINION 25 July 2018 Update RATINGS Al Madina Insurance Company SAOG Domicile Oman Long Term Rating Ba1 Type Insurance Financial Strength - Dom Curr Outlook Stable Please see the ratings section at the end of this report for more information. The ratings and outlook shown reflect information as of the publication date. Analyst Contacts Mohammed Ali Londe +971.4.237.9503 AVP-Analyst [email protected]Harshani Kotuwegedara +971.4.237.9567 Associate Analyst [email protected]Antonello Aquino +44.20.7772.1582 Associate Managing Director [email protected]Helena Kingsley- Tomkins +44.20.7772.1397 AVP-Analyst [email protected]Al Madina Insurance Company SAOG Update to credit analysis: Fiscal year 2017 Summary Al Madina Insurance Company SAOG (”Al Madina”) is rated Ba1 for Insurance Financial Strength rating (IFSR). Established in 2006 in Oman, Al Madina was previously a conventional insurer, and converted to a fully-fledged takaful insurer in January 2014. Al Madina writes a mix of non-life, health and takaful life insurance. Moody's Ba1 rating reflects Al Madina's good position, as the top takaful provider and a top-five market share in the overall Omani insurance market. Since its stock market listing via IPO and takful conversion Al Madina has grown significantly faster than the rest of the Omani market, thereby gaining significant market position from being the 8th in 2013 to being the 5th largest in 2017 with around 7% market share. Al Madina continued to report net profits in 2017 aided by management's decision in 2016 to prune off some loss making lines as well as be more selective in underwriting. The gross contributions increased in 2017 by 10% to reach RO29.9 million as opposed to a 12% reduction in 2016. Due to stringent underwriting Al Madina's combined ratio (CoR) continued to improved to 96.0% from 98.1% in 2016 (2015: 103.6%). All in all, despite the improved CoR the company reported a modest net profit of RO 0.7 million in 2017 (2016: RO 0.6 million) as investment income was somewhat low in 2017. Al Madina remains concentrated within Oman (sovereign rating Baa3, negative ) and remains vulnerable to Omani economic environment. Elsewhere, in 2017 Al Madina incurred a large loss claim under a property damage and business interruption policy. As a result the loss reserves were significantly increased temporarily impact our calculation of Al Madina's capital adequacy metric of gross underwriting leverage (GUL) which deteriorated to 7.4x at YE2017 from 1.7x at YE2016, albeit temporary in our view. However the impact of the loss on Al Madina's underwriting profits was nominal as a result of the prudent reinsurance cover applied by the management. As a result reinsurance recoverable increased at YE2017 with the ratio of reinsurance recoverable as a percentage of shareholders' equity increasing to 570.3% from 53.8% at YE2016. Excluding the large loss it would still be high at around 118%.
Transcript
FINANCIAL INSTITUTIONS
CREDIT OPINION25 July 2018
Update
RATINGS
Al Madina Insurance Company SAOGDomicile Oman
Long Term Rating Ba1
Type Insurance FinancialStrength - Dom Curr
Outlook Stable
Please see the ratings section at the end of this reportfor more information. The ratings and outlook shownreflect information as of the publication date.
Al Madina Insurance Company SAOGUpdate to credit analysis: Fiscal year 2017
SummaryAl Madina Insurance Company SAOG (”Al Madina”) is rated Ba1 for Insurance FinancialStrength rating (IFSR). Established in 2006 in Oman, Al Madina was previously aconventional insurer, and converted to a fully-fledged takaful insurer in January 2014. AlMadina writes a mix of non-life, health and takaful life insurance. Moody's Ba1 rating reflectsAl Madina's good position, as the top takaful provider and a top-five market share in theoverall Omani insurance market. Since its stock market listing via IPO and takful conversionAl Madina has grown significantly faster than the rest of the Omani market, thereby gainingsignificant market position from being the 8th in 2013 to being the 5th largest in 2017 witharound 7% market share.
Al Madina continued to report net profits in 2017 aided by management's decision in 2016to prune off some loss making lines as well as be more selective in underwriting. The grosscontributions increased in 2017 by 10% to reach RO29.9 million as opposed to a 12%reduction in 2016. Due to stringent underwriting Al Madina's combined ratio (CoR) continuedto improved to 96.0% from 98.1% in 2016 (2015: 103.6%). All in all, despite the improvedCoR the company reported a modest net profit of RO 0.7 million in 2017 (2016: RO 0.6million) as investment income was somewhat low in 2017. Al Madina remains concentratedwithin Oman (sovereign rating Baa3, negative) and remains vulnerable to Omani economicenvironment.
Elsewhere, in 2017 Al Madina incurred a large loss claim under a property damage andbusiness interruption policy. As a result the loss reserves were significantly increasedtemporarily impact our calculation of Al Madina's capital adequacy metric of grossunderwriting leverage (GUL) which deteriorated to 7.4x at YE2017 from 1.7x at YE2016, albeittemporary in our view. However the impact of the loss on Al Madina's underwriting profitswas nominal as a result of the prudent reinsurance cover applied by the management. As aresult reinsurance recoverable increased at YE2017 with the ratio of reinsurance recoverableas a percentage of shareholders' equity increasing to 570.3% from 53.8% at YE2016.Excluding the large loss it would still be high at around 118%.
Al Madina's profitability is on an improving trendProfitability indicators
3.0% 2.6%
-3.9%
4.7%
14.6%
-5.0%
-3.0%
-1.0%
1.0%
3.0%
5.0%
7.0%
9.0%
11.0%
13.0%
15.0%
(1.5)
(1.0)
(0.5)
-
0.5
1.0
1.5
2.0
2.5
3.0
2017 2016 2015 2014 2013
Ne
t in
com
e (
RO
mn
)
Net income (loss) Return on avg. capital (1 yr. avg ROC)
Source: Company annual reports, Moody's Investors Service
Credit strengths
» Good insurance market share within Oman, at around 7% in 2017
» Fairly balanced product mix with good diversification within the Omani market on a gross bases
» More conservative investment portfolio than similarly rated GCC peers
Credit challenges
» Maintaining and further improving invested asset quality
» Al Madina's ability to maintain its market position whilst maintaining underwriting profitability in a challenging economicenvironment
» Deterioration of Oman sovereign rating which is currently at Baa3, Negative outlook
Rating outlookThe outlook is stable reflecting our expectation of a continued gradual improvement in results and stabilisation of capitalisation despitethe temporary deterioration due to the large loss.
Factors that could lead to an upgrade
» Combined ratios are consistently below 100% and RoC levels around 5% and above
» The current capitalisation levels were improved or maintained, with gross underwriting leverage consistently below 2.0x
» A reduction in equities and real estate risk occurs, with high risks assets to equity ratio consistently below 60% along with a moregeographically diversified high investment grade portfolio
This publication does not announce a credit rating action. For any credit ratings referenced in this publication, please see the ratings tab on the issuer/entity page onwww.moodys.com for the most updated credit rating action information and rating history.
2 25 July 2018 Al Madina Insurance Company SAOG: Update to credit analysis: Fiscal year 2017
» Profitability were to weaken, either through combined ratios above 105% or negative RoC levels
» A significant increase in real estate/equity exposures
» A significant deterioration in Al Madina’s market position
» A significant delay in recovering or inability to recover the large loss from reinsurers
» Deterioration in the economic environment of Oman with the sovereign rating downgraded
What to watch for
» Al Madina's business and investment mix as it evolves- Capital adequacy and other regulatory compliance in light of new Omanitakaful regulations that are currently being drafted
» Nat Cat events, with Oman more exposed than most GCC countries to windstorms/cyclones
» The economic environment in Oman (currently rated Baa3, negative) given the highly negative impact of the structural shift in oilprices
3 25 July 2018 Al Madina Insurance Company SAOG: Update to credit analysis: Fiscal year 2017
MOODY'S INVESTORS SERVICE FINANCIAL INSTITUTIONS
Key indicators
Exhibit 2
Al Madina Insurance Company SAOG [1][2] 2017 2016 2015 2014 2013
As Reported (Omani Rial Millions)
Total Assets 165.7 53.2 50.9 47.0 42.2
Total Shareholders' Equity 20.8 21.2 20.9 21.0 21.1
Net income (loss) attributable to common shareholders 0.7 0.6 (0.9) 1.0 2.3
[1] Information based on IFRS financial statements as of Fiscal YE December 31 [2] Certain items may have been relabeled and/or reclassified for global consistencySource: Moody’s Investors Service; Company Filings
ProfileEstablished in 2006 in Oman, Al Madina was previously a conventional insurer, and converted to a fully-fledged takaful insurer inJanuary 2014. Al Madina writes a mix of non-life, health and takaful life insurance. They were the fifth largest insurer in Oman in 2017and primarily has corporate accounts, government business as well as personal lines insurance exposure.
Detailed rating considerationsMoody's rates Al Madina Ba1 for insurance financial strength which is in line with the adjusted rating indicated by the Moody'sinsurance financial strength rating scorecard
Market Position and Brand: Baa - Good top line growth after a year of pruning off loss making linesAl Madina's gross contributions grew by 10% to RO29.9 million in 2017 from RO27.2 million in 2016 after a year of premiumcontraction due to selective underwriting and pruning off of loss making lines. The market position also improved from number 8 in2013 to number 5 in 2017. In addition, Al Madina's successful conversion to takaful has established them as the first takaful operatorin the Omani insurance market and so is currently the largest takaful operator in Oman as it continues to serve the largely Muslimpopulation of the Omani market.
Previously Al Madina was focused on smaller corporate accounts and personal lines insurance but has, over the last couple of years,penetrated into the large corporate and government business segment as well. Products are distributed through a number of channels,with the share from direct distributions continuing to increase (43% in 2017), the balance was mainly through brokers (another 43%).Al Madina also has a growing bancassurance channel (8% in 2017) with Al Madina teaming with Omani Islamic banks since 2014.
Product Focus and Diversification: Ba - Writes a variety of business, but concentrated in OmanAlthough Al Madina provides a wide variety of insurance products, its business is fully concentrated in Oman. On a gross basis, theportfolio is evenly split, with group life and health accounting for 33% followed by motor (24% in 2017) and warranties, fire, energy,
4 25 July 2018 Al Madina Insurance Company SAOG: Update to credit analysis: Fiscal year 2017
MOODY'S INVESTORS SERVICE FINANCIAL INSTITUTIONS
engineering, marine cargo and hull and other industrial lines. On a net basis, the mix is more concentrated to motor. Approximately>70% of the motor book comprises of profitable comprehensive motor class, the balance being third party liability insurance.
Asset Quality: Ba - Relatively conservative investment portfolio but Oman concentration poses a riskAl Madina's investment portfolio is relatively conservative compared to most GCC peers with more than 60% of investmentscomprising of cash & bank deposits and fixed income securities . However, Moody's still regards overall asset quality as a creditweakness for Al Madina due to somewhat high equity (14%) and real estate (22%) exposure at YE2017 relative to global peers. This isfurther exacerbated by Al Madina's invested assets being highly concentrated in Oman sovereign which is rated Baa3, negative outlook.If Oman's sovereign rating moves to non-investment grade, majority of bank deposits will also be categorized as HRA, shooting theHRA ratio up. However we understand that there are regulatory requirements around invested assets' geographical location.
High risk assets (HRA) as a % of consolidated (shareholders' and policyholders') equity improved to 58.0% at YE 2017 (YE2016: 61.7%)(see below chart). The marginal improvement in the ratio was due to lower equity investments which represented 14% of the investedassets at YE 2017 (down from 20% at YE 2016). In addition, investments in fixed income marginally increased to 17% of the investmentportfolio from 16% at YE 2016, although about 35% of these are below investment grade investments and so viewed as high riskassets. Looking ahead, asset quality is expected to marginally improve as management applies its conservative investment policy whichaligns with Oman's Capital Market Authority (CMA) guidelines.
Reinsurance recoverable shot up at YE2017 due to a large loss claim and related loss recoverable and so reinsurance recoverable as% of shareholders' equity equated to 570.3% at YE2017 (YE2016: 53.8%) (see below chart), excluding this loss, the ratio would havebeen around 118%. Although the main reinsurance counterparties are strong international players like SCOR, Hannover Re and PartnerRe, Al Madina is also exposed to some smaller regional reinsurers, whose credit quality is viewed as potentially more questionable.Subsequently we note that significant recoveries have been made from reinsurers and as a result expect the recoverable to be settledby Q3 2018. More positively, exposure to goodwill and intangibles is excellent, at around 3.9%, representing deferred commissionexpenses.
Source: Company annual reports, Moody's Investors Service
Capitalisation: Ba - Lower capital due to dividend payment and deteriorated due to large loss, albeit expected to be temporaryAl Madina's shareholders' equity marginally declined by 2% at YE 2017 to RO20.8 million despite having a profitable year as thecompany paid a dividend of RO1.1 million. Positively, the consolidated policyholders’ fund reported a slightly lower deficit ofRO2.4million (RO2.7million at YE2016). The reduction in total shareholders' equity was further exacerbated by the large loss andresulting setting up of loss reserves resulting in a deterioration in gross underwriting leverage (GUL) to 7.4x in 2017 (YE2016: 1.7x).However as noted above, the large loss was largely reisnured and is being settled and recovered. So if we exclude the large loss, theratio will improve to around 2.6x. Furthermore we expect continued gradual improvement in capitalisation in remainder in 2018 and2019 as Al Madina organically strengthens its capital by means of favorable operating results and the outstanding claims are settledand recovered.
5 25 July 2018 Al Madina Insurance Company SAOG: Update to credit analysis: Fiscal year 2017
MOODY'S INVESTORS SERVICE FINANCIAL INSTITUTIONS
Further, the level of capital is significantly higher than the current regulatory minimum of RO10 million and Al Madina would alsobe able to meet, capital requirement of RO10 million each if regulations for segregation of life and non-life businesses take place, aprocess currently under consideration by the Omani regulator
Profitability: Ba - Improved profitability in 2017 compared to 2016Al Madina continued to report net profits in 2017 aided by management's decision in 2016 to prune off some loss making lines as wellas selective underwriting. Due to stringent underwriting Al Madina's CoR continued to improved to 96.0% from 98.1% in 2016 (2015:103.6%). This improvement in underwriting profitability coupled with the company's decision to lower the wakala fees rate to 14%from 20%, resulted in a policyholders' profit of RO 0.27million (loss of RO1.0 million in 2016).
Investment income in 2017 was somewhat low in comparison to 2016 and despite the improvement in underwriting results,Al Madina's net income only improved marginally and was RO0.7 million (RO0.6 million in 2016). The company's investmentperformance has been volatile in the past due to HRA exposure and economic environment. However return on capital (RoC)marginally improved to 3.0% in 2017 from 2.6% in 2016 (-3.9% in 2015). RoC has been volatile historically as indicated by the lowSharpe ratio of 63% which measures the stability of RoC on a 5-year average (2017-2013).
Reserve Adequacy: Baa - Strengthened reserves since 2015Al Madina continues to strengthen its reserves, a prudent measure applied by management since 2015. Moreover, Al Madina hasincorporated actuarial assistance in reserving and pricing, benefitting our assessment of its reserve adequacy for its largely short tailnature of book, which in itself reduces reserving uncertainty.
Financial Flexibility: Baa - Very modest leverageAl Madina has not issued any financial debt, with 2017 financial leverage an excellent 4.6% (2016: 5.5%), reflecting our standardadjustment for operating leases. Moody's believes that the main source of additional capital for Al Madina would likely be throughexisting shareholders, and/or modest short-term bank borrowings. On a separate note, the IPO in 2013 has created a 40% free floatand access to the Omani capital market, which enhances the financial flexibility of Al Madina.
Operating Environment: Ba - Insurance market growing albeit slower than most GCC countriesAl Madina operates in Oman which is rated Baa3, negative outlook. Oman's credit profile reflects heavy economic and fiscal relianceon the oil and gas sector, as a result of which it has suffered a steep deterioration in its fiscal and external accounts since the middleof 2014, including an increase in government debt to an estimated 40% of GDP at the end of 2017 from only 5% in 2014. Thesecredit features are set against Oman's still comparatively strong, but deteriorating, government balance sheet, low levels of contingentliabilities from the banking system and wider public sector, long debt maturities that keep financing needs moderate as well as its highwealth levels.
The insurance market in Oman is relatively small and undiversified, reliant mainly on business driven by Government contracts andprivate compulsory lines and as the economic environment faces challenges, so will the insurance industry in Oman and so the impactsof which will be monitored by us.
6 25 July 2018 Al Madina Insurance Company SAOG: Update to credit analysis: Fiscal year 2017
Exhibit 4Financial Strength Rating Scorecard [1][2] Aaa Aa A Baa Ba B Caa ScoreAdj ScoreBusiness Profile Baa BaaMarket Position and Brand (25%) Baa Baa
- Relative Market Share Ratio X- Underwriting Expense Ratio % Net Premiums Written 33.5%
Product Focus and Diversification (10%) Baa Ba- Product Risk X- P&C Insurance Product Diversification X- Geographic Diversification X
Financial Profile Baa BaAsset Quality (10%) Baa Ba
Operating Environment Ba BaAggregate Profile Baa3 Ba1[1] Information based on IFRS financial statements as of Fiscal YE December 31[2] The Scorecard rating is an important component of the company's published rating, reflecting the stand-alone financial strength before other considerations (discussed above) areincorporated into the analysisSource: Moody’s Investors Service, Company Filings
Ratings
Exhibit 5Category Moody's RatingAL MADINA INSURANCE COMPANY SAOG
Rating Outlook STAInsurance Financial Strength Ba1
Source: Moody's Investors Service
7 25 July 2018 Al Madina Insurance Company SAOG: Update to credit analysis: Fiscal year 2017
CREDIT RATINGS ISSUED BY MOODY'S INVESTORS SERVICE, INC. AND ITS RATINGS AFFILIATES (“MIS”) ARE MOODY’S CURRENT OPINIONS OF THE RELATIVE FUTURE CREDITRISK OF ENTITIES, CREDIT COMMITMENTS, OR DEBT OR DEBT-LIKE SECURITIES, AND MOODY’S PUBLICATIONS MAY INCLUDE MOODY’S CURRENT OPINIONS OF THERELATIVE FUTURE CREDIT RISK OF ENTITIES, CREDIT COMMITMENTS, OR DEBT OR DEBT-LIKE SECURITIES. MOODY’S DEFINES CREDIT RISK AS THE RISK THAT AN ENTITYMAY NOT MEET ITS CONTRACTUAL, FINANCIAL OBLIGATIONS AS THEY COME DUE AND ANY ESTIMATED FINANCIAL LOSS IN THE EVENT OF DEFAULT. CREDIT RATINGSDO NOT ADDRESS ANY OTHER RISK, INCLUDING BUT NOT LIMITED TO: LIQUIDITY RISK, MARKET VALUE RISK, OR PRICE VOLATILITY. CREDIT RATINGS AND MOODY’SOPINIONS INCLUDED IN MOODY’S PUBLICATIONS ARE NOT STATEMENTS OF CURRENT OR HISTORICAL FACT. MOODY’S PUBLICATIONS MAY ALSO INCLUDE QUANTITATIVEMODEL-BASED ESTIMATES OF CREDIT RISK AND RELATED OPINIONS OR COMMENTARY PUBLISHED BY MOODY’S ANALYTICS, INC. CREDIT RATINGS AND MOODY’SPUBLICATIONS DO NOT CONSTITUTE OR PROVIDE INVESTMENT OR FINANCIAL ADVICE, AND CREDIT RATINGS AND MOODY’S PUBLICATIONS ARE NOT AND DO NOTPROVIDE RECOMMENDATIONS TO PURCHASE, SELL, OR HOLD PARTICULAR SECURITIES. NEITHER CREDIT RATINGS NOR MOODY’S PUBLICATIONS COMMENT ON THESUITABILITY OF AN INVESTMENT FOR ANY PARTICULAR INVESTOR. MOODY’S ISSUES ITS CREDIT RATINGS AND PUBLISHES MOODY’S PUBLICATIONS WITH THE EXPECTATIONAND UNDERSTANDING THAT EACH INVESTOR WILL, WITH DUE CARE, MAKE ITS OWN STUDY AND EVALUATION OF EACH SECURITY THAT IS UNDER CONSIDERATION FORPURCHASE, HOLDING, OR SALE.
MOODY’S CREDIT RATINGS AND MOODY’S PUBLICATIONS ARE NOT INTENDED FOR USE BY RETAIL INVESTORS AND IT WOULD BE RECKLESS AND INAPPROPRIATE FORRETAIL INVESTORS TO USE MOODY’S CREDIT RATINGS OR MOODY’S PUBLICATIONS WHEN MAKING AN INVESTMENT DECISION. IF IN DOUBT YOU SHOULD CONTACTYOUR FINANCIAL OR OTHER PROFESSIONAL ADVISER. ALL INFORMATION CONTAINED HEREIN IS PROTECTED BY LAW, INCLUDING BUT NOT LIMITED TO, COPYRIGHT LAW,AND NONE OF SUCH INFORMATION MAY BE COPIED OR OTHERWISE REPRODUCED, REPACKAGED, FURTHER TRANSMITTED, TRANSFERRED, DISSEMINATED, REDISTRIBUTEDOR RESOLD, OR STORED FOR SUBSEQUENT USE FOR ANY SUCH PURPOSE, IN WHOLE OR IN PART, IN ANY FORM OR MANNER OR BY ANY MEANS WHATSOEVER, BY ANYPERSON WITHOUT MOODY’S PRIOR WRITTEN CONSENT.
CREDIT RATINGS AND MOODY’S PUBLICATIONS ARE NOT INTENDED FOR USE BY ANY PERSON AS A BENCHMARK AS THAT TERM IS DEFINED FOR REGULATORY PURPOSESAND MUST NOT BE USED IN ANY WAY THAT COULD RESULT IN THEM BEING CONSIDERED A BENCHMARK.
All information contained herein is obtained by MOODY’S from sources believed by it to be accurate and reliable. Because of the possibility of human or mechanical error as wellas other factors, however, all information contained herein is provided “AS IS” without warranty of any kind. MOODY'S adopts all necessary measures so that the information ituses in assigning a credit rating is of sufficient quality and from sources MOODY'S considers to be reliable including, when appropriate, independent third-party sources. However,MOODY’S is not an auditor and cannot in every instance independently verify or validate information received in the rating process or in preparing the Moody’s publications.
To the extent permitted by law, MOODY’S and its directors, officers, employees, agents, representatives, licensors and suppliers disclaim liability to any person or entity for anyindirect, special, consequential, or incidental losses or damages whatsoever arising from or in connection with the information contained herein or the use of or inability to use anysuch information, even if MOODY’S or any of its directors, officers, employees, agents, representatives, licensors or suppliers is advised in advance of the possibility of such losses ordamages, including but not limited to: (a) any loss of present or prospective profits or (b) any loss or damage arising where the relevant financial instrument is not the subject of aparticular credit rating assigned by MOODY’S.
To the extent permitted by law, MOODY’S and its directors, officers, employees, agents, representatives, licensors and suppliers disclaim liability for any direct or compensatorylosses or damages caused to any person or entity, including but not limited to by any negligence (but excluding fraud, willful misconduct or any other type of liability that, for theavoidance of doubt, by law cannot be excluded) on the part of, or any contingency within or beyond the control of, MOODY’S or any of its directors, officers, employees, agents,representatives, licensors or suppliers, arising from or in connection with the information contained herein or the use of or inability to use any such information.
NO WARRANTY, EXPRESS OR IMPLIED, AS TO THE ACCURACY, TIMELINESS, COMPLETENESS, MERCHANTABILITY OR FITNESS FOR ANY PARTICULAR PURPOSE OF ANY SUCHRATING OR OTHER OPINION OR INFORMATION IS GIVEN OR MADE BY MOODY’S IN ANY FORM OR MANNER WHATSOEVER.
Moody’s Investors Service, Inc., a wholly-owned credit rating agency subsidiary of Moody’s Corporation (“MCO”), hereby discloses that most issuers of debt securities (includingcorporate and municipal bonds, debentures, notes and commercial paper) and preferred stock rated by Moody’s Investors Service, Inc. have, prior to assignment of any rating,agreed to pay to Moody’s Investors Service, Inc. for appraisal and rating services rendered by it fees ranging from $1,500 to approximately $2,500,000. MCO and MIS also maintainpolicies and procedures to address the independence of MIS’s ratings and rating processes. Information regarding certain affiliations that may exist between directors of MCO andrated entities, and between entities who hold ratings from MIS and have also publicly reported to the SEC an ownership interest in MCO of more than 5%, is posted annually atwww.moodys.com under the heading “Investor Relations — Corporate Governance — Director and Shareholder Affiliation Policy.”
Additional terms for Australia only: Any publication into Australia of this document is pursuant to the Australian Financial Services License of MOODY’S affiliate, Moody’s InvestorsService Pty Limited ABN 61 003 399 657AFSL 336969 and/or Moody’s Analytics Australia Pty Ltd ABN 94 105 136 972 AFSL 383569 (as applicable). This document is intendedto be provided only to “wholesale clients” within the meaning of section 761G of the Corporations Act 2001. By continuing to access this document from within Australia, yourepresent to MOODY’S that you are, or are accessing the document as a representative of, a “wholesale client” and that neither you nor the entity you represent will directly orindirectly disseminate this document or its contents to “retail clients” within the meaning of section 761G of the Corporations Act 2001. MOODY’S credit rating is an opinion asto the creditworthiness of a debt obligation of the issuer, not on the equity securities of the issuer or any form of security that is available to retail investors. It would be recklessand inappropriate for retail investors to use MOODY’S credit ratings or publications when making an investment decision. If in doubt you should contact your financial or otherprofessional adviser.
Additional terms for Japan only: Moody's Japan K.K. (“MJKK”) is a wholly-owned credit rating agency subsidiary of Moody's Group Japan G.K., which is wholly-owned by Moody’sOverseas Holdings Inc., a wholly-owned subsidiary of MCO. Moody’s SF Japan K.K. (“MSFJ”) is a wholly-owned credit rating agency subsidiary of MJKK. MSFJ is not a NationallyRecognized Statistical Rating Organization (“NRSRO”). Therefore, credit ratings assigned by MSFJ are Non-NRSRO Credit Ratings. Non-NRSRO Credit Ratings are assigned by anentity that is not a NRSRO and, consequently, the rated obligation will not qualify for certain types of treatment under U.S. laws. MJKK and MSFJ are credit rating agencies registeredwith the Japan Financial Services Agency and their registration numbers are FSA Commissioner (Ratings) No. 2 and 3 respectively.
MJKK or MSFJ (as applicable) hereby disclose that most issuers of debt securities (including corporate and municipal bonds, debentures, notes and commercial paper) and preferredstock rated by MJKK or MSFJ (as applicable) have, prior to assignment of any rating, agreed to pay to MJKK or MSFJ (as applicable) for appraisal and rating services rendered by it feesranging from JPY200,000 to approximately JPY350,000,000.
MJKK and MSFJ also maintain policies and procedures to address Japanese regulatory requirements.
REPORT NUMBER 1124337
8 25 July 2018 Al Madina Insurance Company SAOG: Update to credit analysis: Fiscal year 2017
