Mayfair Insurance has received a credit rating upgrade riding on consistent income growth accompanied by a conservative dividend policy.
Mayfair Insurance, which is associated with politician Peter Kenneth, was accorded a rating of AA- by South African based GCR Ratings, up from A+.
A rating of AA- implies the insurer has the highest likelihood of paying its obligations in time while A+ has a strong likelihood of timely settlement.
The general underwriter has for the last five years been accorded an A+ rating with the recent upgrade following year-on-year growth by the insurer, resulting in increase in market share.
A conservative dividend policy has seen the insurer's capital base expand, 3.2 percent last year, allowing it to absorb more business.
“The upgrade of Mayfair Insurance Company Limited’s national scale financial strength rating reflects the insurer’s sustained robust financial performance, underpinned by consistently strong earnings generation, sound risk-adjusted capitalisation, and prudent liquidity management,” said the rating agency.
“The rating further considers Mayfair’s continued premium growth trajectory, outpacing industry averages and leading to modest market share gains within Kenya’s short-term (non-medical) insurance sector.”
GCR notes Mayfair reported a 20.2 percent growth in revenue last year to Sh8.1 billion, outpacing the industry average growth of 10 percent. This resulted in the insurer’s market share growing to 6.5 percent from six percent in 2023.
Mayfair, which has minority stakes in general underwriters in Uganda, Tanzania, Rwanda, Zambia and Democratic Republic of Congo, helping it benefit from growth in cross border premium inflows.
The company is yet to release its 2024 annual report.
GCR filings said the insurer’s investment return rose to 31 percent at the end of last year from 28.8 percent a year earlier. The return was from a conservative risk appetite approach with bulk of funds held in government securities and term deposits.
It was also quick to pass on risk to reinsurers underpinning its conservative approach.
Mayfair retention ratio was 42.3 percent, meaning it transferred over half –57.7 percent of premiums— to reinsurers going against the industry trend of retaining most of the business in order to have liquidity to invest. The industry’s retention ratio averaged 68 percent last year.
Mayfair is big in aviation, engineering, fire and motor insurance classes. The rating agency put caution on need by Mayfair to monitor its receivables more keenly as they were growing at a faster rate which could be indicators of default owing to the tough economic environment.
Mayfair has interests in real estate with 50 percent shareholding in Mayfair Estates Limited, 30 percent in Kitisuru Development Limited and 30 percent in Seline Holdings Limited.
Some of the large shareholders in Mayfair include Corporate Investment Limited at 25 percent, privately funded entity Andrea Limited (24 percent) and Muhwai Limited (14 percent stake).
