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Moody's accords ATI strong rating over institutional support

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Moody’s cited ATI’s “strong capitalisation and liquidity relative to its insured exposures. FILE PHOTO | NMG

Global credit rating agency Moody’s has assigned an A3 insurance financial strength rating to underwriter African Trade Insurance Agency (ATI) and accorded it a “stable” outlook.

Moody’s cited ATI’s “strong capitalisation and liquidity relative to its insured exposures, as well as high quality and conservative investment portfolio for the rating.

It also concluded that a strong relationship with a number of global reinsurers provides the firm with significant “risk-bearing capacity”.

“ATI benefits from preferred creditor status with all of its member sovereigns, which moderates its exposure to defaults on a large portion of its portfolio,” said Moody’s.

Moody’s, however, warned that the strengths are partially offset by the high-risk nature of its insured exposures and the related weak operating environments. “(The company is) still developing risk management infrastructure and capabilities, and has limited financial flexibility, given its lack of established access to capital markets and dependence on low-rated sovereign members for access to additional funding in case of need,” said Moody’s.

ATI’s shareholder base has grown from seven initial member countries to 14 fully-fledged member states to date.

In the past two years Ethiopia, Cote d’Ivoire, South Sudan and Zimbabwe have joined.

Another five prospective new members are in the pipeline, including Nigeria and Ghana.

ATI said earlier it expects to hire “key staff to strengthen its risk management function”.

“Expansion and prudent risk management have been key pieces of our strategy for some time,” ATI chief executive officer George Otieno said then.

ATI was formed in 2001 with World Bank support to offer insurance for large investment and financing projects.