SA Insurance gets BBB rating from global rating agency

Standard Alliance Insurance Plc which recently got its shareholders’ nod to merge with its life sister company, Standard Alliance Life Assurance Limited, for greater strength and a more superior bottom-line performance has been rated ‘BBB’ by Global Credit Rating, a South African-based rating body, in recognition of its consistent claims paying ability.

Passing a remark in its conclusive report released during the month of August, the rating body observed that the general business underwriting company’s “gross claims declined 17 percent during the year to N887 million with an improvement noted across most classes of business barring fire and marine line,” stating that “while an 11 percent rise in net claims is anticipated during the year, the net incurred loss ratio is expected to contract to 21 percent in 2016 financial year based on the expected growth in premiums.”

While noting that the company was stable in its rating outlook, the rating body further observed that “shareholders’ funds rose by 28 percent to N4.2 billion at 2015 financial year end on the back of internal capital generation,” stating further that “in conjunction with a substantial reduction in retained premium volumes, this led to an improvement in risk adjusted capitalisation with the ratio of shareholders’ funds to net earned premium improving to 172 percent in 2015 from 86 percent in 2014 financial year end.”

The report noted that the company’s statutory solvency regained compliance at 2015 financial year end with admissible asset coverage of liabilities, stating that “going forward, risk adjusted capital adequacy is expected to remain at an adequate level.”

While observing that the company’s focus remains on penetrating the retail market with management confirming new products, which were in the offering to further drive the retail growth, the report stated that SA Insurance’s realised investment income rebounded in 2015 following the share of profit of an associate company during the year.

According to the report, “the insurer’s share of profit or loss has been included in the investment income calculation over the period. Total interest, rental and dividend income lowered to N197 million in 2015, underpinned by reductions in interest income. Overall, operating margin equated to 3 percent in 2015,” stating that “similarly, investment yield registered an improvement to 8 percent from a negative 6 percent previously.”