A.M. Best Affirms Ratings of Continental Reinsurance Plc
LONDON--(BUSINESS WIRE)-- A.M. Best Co. has affirmed the financial strength rating of B (Fair) and issuer credit rating of “bb+” of Continental Reinsurance Plc (Continental Re) (Nigeria). The outlook for both ratings remains stable.
The ratings reflect a robust risk-adjusted capital position, good underwriting results and an improving level of risk management. An offsetting factor is insufficient security within the reinsurance panel for most lines of business.
A.M. Best has witnessed a significant strengthening of Continental Re’s risk management procedures over the past eighteen months, and it is anticipated that these developments will become embedded within the company’s decision-making processes over the coming years.
Continental Re’s level of risk-adjusted capitalisation is likely to remain robust in 2010, despite expectations of further growth in premium income. Robust capitalisation is supported by a high absolute volume of capital, which was injected into the company in 2007 following market-wide recapitalisation within Nigeria.
Although the average credit quality of Continental Re’s outwards reinsurance programme has been improving over recent years, A.M. Best believes that there is still a significant exposure to unrated or insecurely rated retrocessionaires on programmes covering fire, marine/aviation and motor/accident risks, which together account for around 90% of Continental Re’s premium income. Continental Re has in place a new reinsurance programme for its energy risks, which is supported by a reinsurance panel of good credit quality.
Continental Re has experienced a good level of underwriting performance throughout a period of sustained premium growth. In 2009, Continental Re achieved an overall combined ratio of 82%. A.M. Best anticipates there will be some deterioration in combined ratio as the book of business grows, with the combined ratio remaining somewhere in the region of 85%. Although being addressed, the large volume of outstanding premium debtors remains an issue.
For Best’s Credit Ratings, an overview of the rating process and rating methodologies, please visit www.ambest.com/ratings.
The principal methodology used in determining these ratings is Best's Credit Rating Methodology - Global Life & Non-Life Insurance Edition. Additional methodologies that may apply can be found at www.ambest.com/ratings/methodology.
Founded in 1899, A.M. Best Company is a global full-service credit rating organization dedicated to serving the financial and health care service industries, including insurance companies, banks, hospitals and health care system providers. For more information, visit www.ambest.com.
A.M. Best Co.
Analysts:
Timothy Prince, +(44) 20 7626 6264
[email protected]
or
Carlos Wong-Fupuy, +(44) 20 7626 6264
[email protected]
or
Public Relations:
Rachelle Morrow, +(1) 908-439-2200, ext. 5378
[email protected]
or
Jim Peavy, +(1) 908-439-2200, ext. 5644
[email protected]
Source: A.M. Best Co.
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