AM Best Revises Issuer Credit Rating Outlook to Negative for Kenya Reinsurance Corporation Limited

Business Wire

LONDON--(BUSINESS WIRE)-- AM Best has revised the outlook of the Long-Term Issuer Credit Rating (Long-Term ICR) to negative from stable and affirmed the Financial Strength Rating (FSR) of B (Fair) and the Long-Term ICR of “bb+” of Kenya Reinsurance Corporation Limited (Kenya Re) (Kenya). The outlook of the FSR has been maintained as stable.

The ratings reflect Kenya Re’s balance sheet strength, which AM Best categorises as very strong, as well as its adequate operating performance, neutral business profile and weak enterprise risk management.

The negative outlook on the Long-Term ICR reflects Kenya Re’s poor technical performance in recent years, demonstrated by non-life underwriting results that are materially weaker than its historical average and regional peers in 2018 and 2019.

Kenya Re reported an unaudited non-life underwriting loss of KES 2.6 billion in 2019, significantly higher than the loss of KES 1.1 billion reported in 2018. The deterioration in performance was not anticipated by AM Best and was driven primarily by the company’s books of business in the Middle East and Asia. While the company’s net income improved to KES 4.0 billion (2018: KES 2.3 billion), this was primarily driven by a one-off unrealised gain of KES 1.9 billion from an investment property write-back. Given the International Monetary Fund’s negative economic growth projection for Sub-Saharan Africa in 2020, AM Best expects operating conditions to be challenging. Failure to improve underwriting performance materially will likely result in a further negative rating action for Kenya Re.

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 media use of Best’s Credit Ratings and AM Best press releases, please view Guide for Media - Proper Use of Best’s Credit Ratings and AM Best Rating Action Press Releases.

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