A.M. Best Affirms Ratings of Kenya Reinsurance Corporation Limited

LONDON--(BUSINESS WIRE)-- A.M. Best Europe – Rating Services Limited has affirmed the financial strength rating of B+ (Good) and issuer credit rating of “bbb-” of Kenya Reinsurance Corporation Limited (Kenya Re) (Kenya). The outlook for both ratings remains stable.

The ratings reflect Kenya Re’s strong level of risk-adjusted capitalisation and good local business profile. Offsetting the rating is a weak level of risk management.

Kenya Re benefits from an 18% compulsory cession of all treaty business within its local market, which is set to remain in place until at least the end of 2015. Compulsory cessions account for around 40% of Kenya Re’s gross premium income, with the remainder being voluntary in nature and dispersed throughout Africa and internationally.

A strong level of risk-adjusted capitalisation is supported by a large relative capital base. A.M. Best considers that Kenya Re’s prospective business plans are likely to be supported by the retention of a significant proportion of overall profits in future years. Partially offsetting Kenya Re’s level of risk-adjusted capitalisation is a very high volume of premium debtors, which A.M. Best anticipates may result in significant provisioning in future years.

In A.M. Best’s opinion, Kenya Re’s current level of risk management is poor. The company does not employ any formalized modeling tools to assess its catastrophe exposure, which is reflected by an unsophisticated assessment of its probable maximum loss (PML). Furthermore, A.M. Best is concerned that Kenya Re’s management is unable to monitor other risk metrics and utilizes only poor quality management information.

The principal methodology used in determining these ratings is Best’s Credit Rating Methodology -- Global Life and Non-Life Insurance Edition, which provides a comprehensive explanation of A.M. Best’s rating process and highlights the different rating criteria employed. Additional key criteria utilised include: “Risk Management and the Rating Process for Insurance Companies”; “Understanding BCAR for Property/Casualty Insurers”; and “Assessing Country Risk”. Methodologies can be found at www.ambest.com/ratings/methodology.

In accordance with Regulation (EC) No. 1060/2009, the following is a link to required disclosures: A.M. Best Europe - Rating Services Limited Supplementary Disclosure.

A.M. Best Europe – Rating Services Limited is a subsidiary of A.M. Best Company.Founded in 1899, A.M. Best Company is the world's oldest and most authoritative insurance rating and information source. For more information, visit www.ambest.com.

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A.M. Best
Timothy Prince
Financial Analyst
+(44) 20 7397 0320
[email protected]
or
Carlos Wong-Fupuy
Assistant General Manager
+(44) 20 7397 0287
[email protected]
or
Rachelle Morrow
Senior Manager, Public Relations
+(1) 908 439 2200, ext. 5378
[email protected]
or
Jim Peavy
Assistant Vice President, Public Relations
+(1) 908 439 2200, ext. 5644
[email protected]

Source: A.M. Best Europe – Rating Services Limited