LONDON--(BUSINESS WIRE)--A.M. Best has affirmed the financial strength rating of B+ (Good) and the issuer credit rating of “bbb-” of Kenya Reinsurance Corporation Limited (Kenya Re) (Kenya). The outlook for both ratings is stable.
The ratings reflect Kenya Re’s adequate risk-adjusted capitalisation, stable operating performance and strong competitive position within its local market. Partially offsetting rating factors include the ongoing challenges related to the current conditions in the reinsurance market, the company’s weak enterprise risk management (ERM) culture and its exposure to Kenya’s volatile business environment.
During the first half of 2015, Kenya Re maintained good levels of risk-adjusted capitalisation whilst increasing its gross written premiums. During this period, Kenya Re increased its shareholding interest in ZEP-RE (PTA Reinsurance Company), reaching a 16% stake in its local competitor. Although this investment increases the capital requirements to support investments in affiliates, Kenya Re’s risk-adjusted capitalisation remains at an adequate level. During the first six months of the year, Kenya Re’s operating performance was stable, and the loss ratio during the period was broadly unchanged when compared with the same period in 2014. Going forward, A.M. Best expects the company to continue to grow its business whilst maintaining adequate risk-adjusted capitalisation and stable underwriting performance.
On the other hand, market conditions remain uncertain, and Kenya Re remains exposed to Kenya’s volatile business environment. Moreover, the company’s ERM culture is relatively weak for its current risk profile. A.M. Best considers that as Kenya Re continues growing its franchise and increasing the complexity of its risk exposures, this weakness could turn into a potential source of instability.
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