Occidental Insurance's business profile was assessed as sound, supported
by a well-balanced and consistent earnings stream. FILE PHOTO | NMG
Summary
- Global Credit Rating (GCR) said Occidental Insurance company reflects strong risk-adjusted capitalisation, supported by limited market risk exposures and well-contained insurance risk.
- The South Africa-based agency expects capitalisation to remain strong on account of sound internal capital generation and a conservative dividend policy.
Global Credit Rating (GCR) has affirmed Occidental Insurance
company national scale claims paying ability of A-(KE) giving it a
stable outlook.
The South Africa-based agency has said
the insurer reflects strong risk-adjusted capitalisation, supported by
limited market risk exposures and well-contained insurance risk.
GCR
expects capitalisation to remain strong on account of sound internal
capital generation and a conservative dividend policy. The rating is
valid until December 2018.
“The insurer’s reinsurance
panel reflects a sound aggregated level of credit strength, with maximum
net deductibles viewed to be moderately high relative to capital,” the
agency said.
GCR expects the firm’s liquidity metrics
to continue within a strong range over the rating duration, supported by
healthy operating cash flow generation and conservative asset
allocation, with the bulk of investments held in liquid assets.
It
noted that underwriting contractions have been partially offset by
sound investment income, with return on revenue equating to a healthy
nine per cent in 2016.
While management expects
underwriting margins to recover to moderately strong levels in 2018
(four per cent), GCR notes the potential for sustained underwriting
compression over the outlook horizon due to elevated claims and lower
efficiencies.
The insurer’s business profile was assessed as sound, supported by a well-balanced and consistent earnings stream.
However, this is partially offset by intermediate competitive positioning.
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