AM Best Assigns Credit Ratings to Société Nationale d'Assurance

LONDON--(BUSINESS WIRE)--AM Best has assigned a Financial Strength Rating of B (Fair) and the Long-Term Issuer Credit Rating of “bb+” (Fair) to Société Nationale d'Assurance (SAA) (Algeria). The outlook assigned to these Credit Ratings (ratings) is stable.

The ratings reflect SAA’s balance sheet strength, which AM Best assesses as very strong, as well as its adequate operating performance, neutral business profile and marginal enterprise risk management (ERM).

SAA’s very strong balance sheet strength assessment is underpinned by its risk-adjusted capitalisation, which is expected to remain comfortably above the minimum required for the strongest assessment, as measured by Best’s Capital Adequacy Ratio (BCAR), supported by good earnings retention. The assessment factors in the company's good levels of liquidity, driven by significant holdings of cash and government bonds, which accounted for 65% of total investments at year-end 2023, translating into a ratio of liquid assets to total liabilities of 114%. A partially offsetting rating factor is SAA’s significant exposure to the elevated levels of economic, political and financial system risks associated with Algeria, where the company is domiciled, solely operates and holds over 95% of its investments.

SAA has a track record of stable operating performance, with profit before tax ranging from DZD 2.5 billion (USD 22.6 million) to DZD 3.6 billion (USD 31.0 million) between 2019 and 2023, translating in a five-year weighted average return on equity of 6.3% (as calculated by AM Best). The company’s results have been supported by good and consistent technical profitability, with a five-year weighted average combined ratio of 97.5% (as calculated by AM Best), supplemented by moderate investment returns, evidenced by a five-year weighted average investment yield of 2.8% (as calculated by AM Best).

With gross written premium of DZD 30.2 billion (USD 226.0 million) in 2023, SAA benefits from a strong leading and sustainable market position in Algeria as the largest direct insurer, with an estimated market share of just over 20%. The company has been the leader historically in the domestic motor segment, and has developed strong positions in the commercial risk segments in recent years. SAA has more recently expanded its offer to agricultural cover. The company’s geographic concentration is considered a partially offsetting rating factor, with all insurance business currently sourced in Algeria.

AM Best considers SAA’s ERM framework to be at an early stage of development. AM Best expects the company’s risk management capabilities to improve following the establishment of a risk function in 2022, which is expected to support the development of a formalised ERM framework.

This press release relates to Credit Ratings that have been published on AM Best’s website. For all rating information relating to the release and pertinent disclosures, including details of the office responsible for issuing each of the individual ratings referenced in this release, please see AM Best’s Recent Rating Activity web page. For additional information regarding the use and limitations of Credit Rating opinions, please view Guide to Best’s Credit Ratings. For information on the proper use of Best’s Credit Ratings, Best’s Performance Assessments, Best’s Preliminary Credit Assessments and AM Best press releases, please view Guide to Proper Use of Best’s Ratings & Assessments.

AM Best is a global credit rating agency, news publisher and data analytics provider specialising in the insurance industry. Headquartered in the United States, the company does business in over 100 countries with regional offices in London, Amsterdam, Dubai, Hong Kong, Singapore and Mexico City. For more information, visit www.ambest.com.

Copyright © 2024 by A.M. Best Rating Services, Inc. and/or its affiliates. ALL RIGHTS RESERVED.