LONDON--(BUSINESS WIRE)--A.M. 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 A.M. Best categorises as very strong, as well as its adequate operating performance, limited business profile, and marginal enterprise risk management.
EARe has generated robust and relatively stable overall earnings over recent years, reporting a five-year average return on equity of 15% (2012-2016). With support from its shareholders, EARe has retained the majority of these profits to support the growth of its operations. EARe’s non-life underwriting result was marginal in 2016 due to its exposure to a number of moderately large losses; however, the company’s overall earnings benefited from its strongly performing life reinsurance business and stable investment results. A.M. Best expects EARe to report robust results for 2017, and to maintain risk-adjusted capitalisation supportive of A.M. Best’s strongest assessment via the retention of earnings and strengthening of its retrocession protection against catastrophe losses.
An offsetting rating factor is EARe’s modest competitive position within its regional reinsurance market. The company has a relatively small market share, follows on the majority of its reinsurance treaties, and competes against reinsurers that are typically larger and that often command mandatory reinsurance cessions. At the same time, political and economic conditions in Kenya continue to be offsetting rating factors.
This press release relates to Credit Ratings that have been published on A.M. 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 A.M. Best’s Recent Rating Activity web page. For additional information regarding the use and limitations of Credit Rating opinions, please view Understanding Best’s Credit Ratings. For information on the proper media use of Best’s Credit Ratings and A.M. Best press releases, please view Guide for Media - Proper Use of Best’s Credit Ratings and A.M. Best Rating Action Press Releases.
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