The International Credit Rating Agency, Global Credit Rating Limited, (GCR), has confirmed Sovereign Trust Insurance Plc as an A-rated underwriting firm in the insurance sector of the Nigerian economy.
Before now, Sovereign Trust Insurance was rated A- due to the company’s high claims-paying ability amongst other requisite considerations for the rating.
The rationale behind the current rating from A-to A, according to GCR is based on the company’s renewed financial position and stable outlook from a statutory solvency perspective in the last three years.
It will be recalled that the underwriting firm in 2019 increased its shareholders’ funds from N4.1 billion to N5.6 billion through the Rights Issue that was carried out in that year, in line with the capitalization agenda of the company in wanting to occupy a leadership position in the insurance sector in Nigeria.
The rating agency posited that the company’s solvency margin improved remarkably, and it is very much in compliance with the proposed regulatory capital requirement for the industry.
The report further stated that, “despite the effects of the covid-19 pandemic on businesses and the fallout of the nationwide protest in 2020, the impact on underwriting performance was well absorbed by an improvement in the insurer’s scale efficiencies, with operating expense ratio registered at 37.0 percent in FY20 against the 53.19 percent that was recorded in FY19.”
Read also: Moody’s to acquire majority stake in GCR Ratings
Also, investment income maintained an upward trajectory over the review period, thereby supporting return on revenue at 10.5 percent in FY20 as against 8.5 percent recorded in FY19.
GCR expects STI’s liquidity metrics to remain sound on the back of conservative asset allocation and the planned additional capital injection.
According to the Rating Agency, Sovereign Trust Insurance Plc has a strong direct business generation capacity, which has over time stimulated retail segment penetration. The premium mix is considered well diversified and can still be improved upon in the years ahead.
The company aims at becoming one of the top five in the insurance sector within the shortest possible time. To achieve this, conscious effort is being made to open new channels of distribution to afford Nigerians qualitative insurance products and services through borderless technology that will serve as an enduring game-changer in the insurance market space both at home and abroad.
Sovereign Trust Insurance Plc is committed to attracting and retaining the best hands in the insurance business in Nigeria with a rare combination of proven professionals from diverse areas of discipline.
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