GCR now gives Kenya Re a stable outlook

Kenya Reinsurance Plaza on September 20, 2018. PHOTO | SALATON NJAU | NMG 

By BRIAN NGUGI

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Summary

• The ratings agency that last month placed Kenya Re ratings under review, said the fresh ratings valid until July next year, are underpinned by strong capital buffers.
• GCR said Kenya Re’s domestic market position (at 18 per cent market share) is underpinned by compulsory cessions, and the affiliation with the Kenyan government, while earnings are fairly spread across different geographic locations and lines of business.

Johannesburg based agency Global Credit Ratings (GCR) has affirmed the Kenya Reinsurance Corporation (Kenya Re)

national scale claims paying ability rating of AA(KE) and international scale claims paying ability rating of BB. Both ratings were accorded a stable outlook.

The ratings agency that last month placed Kenya Re ratings under review, said the fresh ratings valid until July next year, are underpinned by strong capital buffers.

“The re-insurer’s business profile is strong, supported by a favourable strategic position and well diversified earnings,” said GCR.

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“The strengthening of asset liability management approaches in recent years and a sizeable investment portfolio support very strong liquidity metrics, which are likely to be sustained over the medium term.”

GCR said Kenya Re’s domestic market position (at 18 per cent market share) is underpinned by compulsory cessions, and the affiliation with the Kenyan government, while earnings are fairly spread across different geographic locations and lines of business.

“The re-insurer’s status as an established player was further cemented by the establishment of subsidiaries in strategic locations (in recent years), with the expectation of entrenching business relationships in Southern and West Africa.”

American AM Best had in February downgraded the financial strength rating of the listed firm to B (Fair) from B+ (Good) and the long-term Issuer rating to bb+ from bbb.

Kenya Re, which offers cover to more than 160 insurance companies spread out in over 45 countries in Africa, the Middle East and Asia, has said it is eyeing new markets across the globe to boost income in the face of stiffening competition both locally and abroad.

GCR said that in line with this the firm’s business profile is expected to remain strong, “further supported by strong brand recognition and elevated underwriting capacity relative to local and regional players.”