AM Best Upgrades Issuer Credit Rating of Custodian and Allied Insurance Limited

December 14, 2018

LONDON--(BUSINESS WIRE)--Dec 14, 2018--AM Best has upgraded the Long-Term Issuer Credit Rating (Long-Term ICR) to “bb+” from “bb” and affirmed the Financial Strength Rating (FSR) of B (Fair) of Custodian and Allied Insurance Limited (CAI) (Nigeria). The outlook of the Long-Term ICR has been revised to stable from positive while the FSR outlook remains stable. CAI is the wholly owned non-life subsidiary of Custodian Investment Plc.

The ratings reflect CAI’s balance sheet strength, which AM Best categorises as very strong, as well as its strong operating performance, limited business profile and marginal enterprise risk management (ERM).

The Long-Term ICR upgrade reflects CAI’s resilient operating performance in a highly competitive operating environment, as evidenced by its five-year combined ratio of 88.5%. Technical performance remained strong in 2017, with the company generating a combined ratio of 81.5% (as calculated by A.M Best). The volatility of underwriting results in recent years, largely driven by the devaluation of the Nigerian Naira against stronger foreign currencies, is a partially offsetting factor.

The company generated an average return on equity of 24% over the past five years (2013-2017), bolstered by foreign exchange gains. AM Best expects prospective earnings to remain robust, although likely at a lower level in the absence of major foreign exchange gains.

CAI’s balance sheet strength is underpinned by risk-adjusted capitalisation at the strongest level, as measured by Best’s Capital Adequacy Ratio (BCAR), and a prudent dividend policy. Partially offsetting these balance sheet factors is the quality of CAI’s assets, which are mainly restricted to Nigeria, and its moderate dependence on reinsurance. The ratings also factor in the company’s exposure to high levels of economic risk, and very high levels of political and financial system risk associated with operating exclusively in Nigeria. The ongoing development of CAI’s ERM framework is expected to be a positive factor in sustaining the company’s balance sheet strength. In particular, the company’s internal risk-based capital model has started to support strategic decision making, such as reinsurance placements and capital management policy.

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 .

AM Best is a global rating agency and information provider with a unique focus on the insurance industry. Visit for more information.

Copyright © 2018 by A.M. Best Rating Services, Inc. and/or its affiliates. ALL RIGHTS RESERVED.

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CONTACT: Luca Patron

Financial Analyst

+44 20 7397 0304

luca.patron@ambest.comTim Prince

Director, Analytics

+44 20 7397 0320

tim.prince@ambest.comChristopher Sharkey

Manager, Public Relations

+1 908 439 2200, ext. 5159

christopher.sharkey@ambest.comJim Peavy

Director, Public Relations

+1 908 439 2200, ext. 5644





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PUB: 12/14/2018 10:48 AM/DISC: 12/14/2018 10:47 AM


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