AM Best Affirms Credit Ratings of East Africa Reinsurance Company Limited
LONDON--(BUSINESS WIRE)--Dec 14, 2018--AM Best has affirmed the Financial Strength Rating of B (Fair) and the Long-Term Issuer Credit Rating of “bb+” of East Africa Reinsurance Company Limited (EARe) (Kenya). The outlook of these Credit Ratings (ratings) remains stable.
The ratings reflect EARe’s balance sheet strength, which AM Best categorises as very strong, as well as its adequate operating performance, limited business profile and marginal enterprise risk management (ERM).
EARe’s balance sheet strength is underpinned by risk-adjusted capitalisation, as measured by Best’s Capital Adequacy Ratio (BCAR), which remained at the strongest level as at year-end 2017. AM Best expects risk-adjusted capitalisation to be maintained at the strongest level prospectively. Offsetting factors to the balance sheet strength assessment include the company’s modest capital base and its limited financial flexibility as a result of its private shareholding structure. The ratings also consider the group’s exposure to the high levels of economic and political risk and very high levels of financial system risk associated with operating within Kenya.
EARe generated a five-year (2013-2017) average return on equity of 14.6%. Operating performance remained relatively stable over this period, benefitting from balance of earnings across the company’s life and non-life portfolios. In 2017, EARe reported a net profit after tax of KES 602 million (2016: KES 466 million), supported by its well-performing life reinsurance business and stable investment results.
EARe’s competitive position is restricted as a result of its modest size and weaker market position in the regional reinsurance market compared with its peers; EARe’s competitors benefit from mandatory cessions. The company has implemented a simple risk framework and established comprehensive governance controls; however, further development is underway to strengthen EARe’s risk culture and embed ERM across the organisation.
This press release relates to Credit Ratings that have been published on AM Best’s website. For all rating information relating to the release and pertinent disclosures, including details of the office responsible for issuing each of the individual ratings referenced in this release, please see AM Best’s web page. For additional information regarding the use and limitations of Credit Rating opinions, please view . For information on the proper media use of Best’s Credit Ratings and AM Best press releases, please view .
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CONTACT: Jalpa Thanky
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KEYWORD: UNITED KINGDOM EUROPE AFRICA KENYA
INDUSTRY KEYWORD: HEALTH INFECTIOUS DISEASES
SOURCE: AM Best
Copyright Business Wire 2018.
PUB: 12/14/2018 10:35 AM/DISC: 12/14/2018 10:35 AM