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Fitch downgrades Saudi insurer Tawuniya after reserve strengthening

Fitch Ratings has downgraded the insurer financial strength rating of Co. for Cooperative Insurance (Tawuniya) to A- from A.

The outlook is stable.

Fitch said the downgrade was driven by a 1 billion-Saudi-riyal reserve strengthening in the fourth quarter of 2017, which resulted in an overall loss for Tawuniya in 2017 and a reduction in retained earnings. The rating agency does, however, expect this reserve strengthening to be one-off in nature. It also said that Tawuniya will likely return to underwriting profitability in 2018.

The insurer's rating is supported by its strong business profile in the Saudi Arabia insurance market, strong underlying earnings generation and adequate capitalization, according to Fitch.

As of May 29, US$1 was equivalent to 3.75 Saudi Arabian riyals.