LONDON--(BUSINESS WIRE)--AM Best has affirmed the Financial Strength Rating of B+ (Good) and the Long-Term Issuer Credit Rating of “bbb-” of Compagnie Centrale de Réassurance (CCR Algeria) (Algeria). The outlook of these Credit Ratings (ratings) is stable.
The ratings reflect CCR Algeria’s balance sheet strength, which AM Best categorises as very strong, as well as the company’s strong operating performance, neutral business profile and marginal enterprise risk management.
CCR Algeria’s balance sheet strength is underpinned by risk-adjusted capitalisation, which was at the strongest level at year-end 2018, as measured by Best's Capital Adequacy Ratio (BCAR). AM Best expects risk-adjusted capitalisation to remain at the strongest level over the medium term, supported by relatively low underwriting leverage and good internal capital generation. The company has a moderate dependence on retrocession, which is used to protect peak exposures, notably in Algeria. The balance sheet is protected further by a state guarantee covering business written as part of Algeria’s compulsory natural catastrophe scheme. The assessment also factors in CCR Algeria’s exposure to elevated levels of economic, political and financial system risk associated with Algeria, with approximately 95% of assets invested domestically.
Whilst CCR Algeria has experienced sustained growth over the past five years, with gross written premium having increased by approximately 45%, its operating performance has remained strong, supported by a solid technical profitability and relatively stable investment returns. The company has a five-year (2014-2018) weighted average combined ratio of 80.3% and return on equity of 9.6%.
CCR Algeria has a leading domestic market position as the national reinsurer in Algeria, with an estimated market share of 71% in 2018, as measured by ceded premium. As a state-owned company, CCR Algeria benefits from compulsory cessions and manages various national insurance schemes. The company also plays a pivotal role in the domestic natural catastrophe scheme. Despite growth in its international portfolio over recent years, CCR Algeria’s business profile remains heavily concentrated in Algeria, where the company originated 86.4% of its business in 2018.
CCR Algeria’s risk management framework is at an early stage of development. Risk management capabilities are expected to improve with the development of an internal capital model. AM Best will continue to assess how new risk management tools are deployed effectively across the company’s operations.
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