Johannesburg-based Global Credit Rating (GCR) has accorded East Africa Reinsurance Company (EA-Re) a stable outlook on the back of strong liquidity levels.
The agency in its latest notification expects the reinsurer to remain well capitalised under the income risk-based capital regime, supported by sound internal capital targets.
The national scale claims-paying ability for the Nairobi-based reinsurer was put at A+(KE, and its international scale claims paying ability rating at B+. The ratings are valid until next June.
“Liquidity is assessed at strong levels, supported by a conservative asset allocation mix. As such, liquid assets (including government) securities covering of net technical liabilities equated to 1.5x in 2017, while liquid assets (including government securities) covered average monthly claims by 11 months. Liquidity metrics are likely to measure at a similar level over the rating horizon,” said GCR.
The GCR said the reinsurer’s competitive position remained relatively modest compared to other regional and international players operating within the region.
The agency said EA Re market share in the domestic short-term reinsurance business rose to 18.7 per cent in 2017 from 16.5 per cent the previous year, following a 30 per cent increase in premium volume.
GCR said it views this as a positive sign given other reinsurers competing for similar risks in the local market have mandatory cessions that are not available to the firm.
Since 2016, the reinsurer has widened its footprint to serve underwriters in East, Central, West and southern Africa as well as companies in the Middle East.
EA Re was formed through a joint initiative of local insurance firms in Kenya and the International Finance Corporation, the private sector arm of the World Bank in 1993, before starting its operations in January 1995.