GCR acted in accordance with the wishes of the insurer, which means the agency will no longer provide ratings or analytical coverage of UAP in the troubled country.
The move follows a downgrade last September when it was also accorded a negative outlook by the agency.
UAP Insurance South Sudan rating for claims payment ability by Global Credit Ratings (GCR) has been withdrawn following the underwriter’s request.
GCR said it had not done any updated analysis but only acted in accordance with the wishes of the insurer, which means the agency will no longer provide ratings or analytical coverage of UAP in the troubled country.
The move follows a downgrade last September when it was also accorded a negative outlook by the agency.
Despite the withdrawal and earlier downgrading of the South Sudan subsidiary of UAP Holdings, UAP Insurance Kenya and Uganda were given stable outlooks last July.
“GCR has today [Thursday] withdrawn the national scale claims paying ability rating assigned to UAP South Sudan. At the last review in September 2017, GCR downgraded the insurer’s rating to BBB- from BBB+, reflecting the deterioration in UAP South Sudan’s credit profile,” said GCR in a statement.
It added the downgrading was based on the insurer’s material aggregated exposure to a related party, which was exacerbated by lower-than-anticipated performance on an underlying earning asset.
The downgrade related to the assessment that there was a higher risk of the loans lent to the affiliate taking longer to be repaid even though they were supposed to be only short- term.
The rating agency also noted the material exposure or loan did not rank highly among the loans that the borrower was to repay.
That means that the risk is exacerbated by the fact that the loan is subordinated to loans taken from entities external to the affiliate and, therefore, its repayment to UAP South Sudan is not a priority.
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