NSIA Insurance Company Limited (Oct 2022)

NSIA Insurance is a licensed short-term insurance company established in 2010 following an acquisition of more than 80% in CDH Insurance by Groupe NSIA (“NSIA Participations” or “the group”). NSIA Participations is a large regional group, which has brand presence in 13 West and Central African countries predominantly through majority direct or indirect shareholdings in co-branded subsidiaries and associates. The group is headquartered in Ivory Coast and focuses mainly on the insurance, banking and finance sectors. Following a rights issue that was successfully concluded towards the end of 2021 (valued at about USD3m), the group retained its controlling stake in NSIA Insurance with a shareholding of c. 97%.

NSI Insurance is small in the context of the broader group, representing about 2% of consolidated gross premiums. As a result, we conduct the analysis on a standalone basis, with considerations for group support up to the applicable threshold.   

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Mainstream Reinsurance Company Limited (Sep 2022)

Mainstream Re commenced operations in 1994, as a stand-alone reinsurer and the first privately owned reinsurer in Ghana.  The composite risk carrier is currently majority owned by Kwame Addo (45.99%); Felix Ntrakwah (35.02%), Ghana Union Assurance Company (9.56%), Owusu Achaw (6.53%) and Fosuhene Asante (2.9%). Despite having a predominantly individual shareholding base, Mainstream Re has complied with steep minimum capital requirements in the market over the years including the current increase to GHC125m through a rights issue. Currently, Mainstream Re is one of the four domestic licenced reinsurers that have a right of first refusal to new business generated within the domestic market, presenting significant growth opportunities locally. However, the participation on external market remains limited at around 1%. Given that Mainstream Re is not part of a group of companies, we assess its credit profile on a stand-alone basis.

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Letshego Ghana Savings and Loans PLC (Sep 2022)

Letshego Ghana Savings and Loans PLC (“Letshego Ghana”, “the company”) rebranded in September 2019 from AFB Ghana Plc (“AFB Ghana”) after acquisition by Letshego Holdings Limited (“LHL”). The company began operating in 2009 as a non-bank financial institution (“NBFI”), providing unsecured consumer finance to the under-banked market (i.e., small/micro businesses and individuals).

The analytical approach is based on a mixture of the bank’s standalone credit analysis and Group support characteristics. Letshego Ghana is wholly owned by LHL which is headquartered and listed in Botswana delivering finance solutions to populations across 11 Sub Saharan Markets. The Group does not operate as one holistic operating structure as the group’s entities are largely operationally self-sufficient, and there is no cross-default clauses or large direct credit linkages.

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Fidelity Bank Ghana Limited (Sep 2022)

The ratings of Fidelity Bank Ghana Limited (FBL Ghana) are based on the credit profile of the consolidated Fidelity Limited (“the Group”) as the bank conducts a critical role and is a significant part of the Group accounted 100% of loans and advances. The Group is owned by Ghanaian individuals, other institutional investors and its senior executives.

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Activa International Insurance Company Limited (Sep 2022)

The insurer started operations in January 2005 as Global Alliance Insurance Company Ltd and is licensed to write short term general insurance business. The parent company of Global Alliance was Global Alliance Holdings, a company incorporated in the Isle of Man, headquartered in South Africa. In 2009, Activa Assurance Limited acquired 100% of the insurer’s holding, after which the company began trading as Activa International Insurance Company Limited (Ghana). Activa Ghana is a member of the Globus Network of insurance companies in Africa. The network (currently comprising 46 members in different African countries) was established by the holding company in 2007, with the purpose of providing insurance solutions for multi-nationals operating across the African continent. In FY15, with the aim of achieving a more efficient group structure, Activa Assurance Limited transferred ownership of Activa Ghana to Activa Finance, a holding company incorporated in Mauritius. 91.8% of the company’s shares are now held by Activa Finance (FY21: 88%) and various directors and managers of the company.

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Star Assurance Company Limited (Sep 2022)

Star is a privately owned Insurance Company that was incorporated in August 1984 to carry out corporate and retail insurance businesses in Ghana. It commenced business in April 1985. Star, which started as a composite company hived off its life insurance operation by setting up a subsidiary company, StarLife Assurance. Star is 100% owned by Star Group, which is in turn owned by HODA Holdings Ltd, a business entity founded by Dr Kwabena Duffuor comprising insurance, banking, real estate, education and media subsidiaries. Star currently operates 28 branches in 7 regions in the country, reflecting a wide representation in the Ghanaian general insurance market.

 

The insurer’s medium-term strategy seeks to increase premium and asset growth while enhancing profitability. This is to be achieved through increased premium retention and acquisition of new business. Star has plans to expand the retail portfolio and has strategies in place to complement the retail growth agenda. The achievement of these goals will be supported by the use of non-traditional distribution channels like the mobile app, online platforms and bancassurance. The insurer will also work on strengthening relationships with intermediaries and top clients to increase the retention rate.

 

Despite being part of a wider financial services group, there are currently no consolidated group financial statements above Star. The analytical approach is therefore on a stand-alone basis, with potential risks stemming from other group relationships catered for in our management and governance assessment.

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Enterprise Insurance LTD (Jul 2022)

Enterprise Insurance LTD was originally founded in 1924 as Royal Exchange Assurance Corporation, being the first insurance company operating in Ghana, and was subsequently renamed to Guardian Royal Exchange Assurance. The underwriter has been operating under the name Enterprise Insurance Company Limited since 1976 and was the first insurance company to list on the Ghana Stock Exchange in 1991. In August 2010, Enterprise Group Plc (“the group”), formerly Enterprise Group Limited, was established. The group housed insurance and related subsidiaries. Following the establishment of the group, the underwriter was de-listed from the local stock exchange, with the parent company listing in November 2010. In July 2021, Enterprise Insurance Company Limited changed its name to Enterprise Insurance LTD to comply with the naming requirements of the new Company’s Act (2019).

Enterprise Insurance is majority owned (75%) by the group with the remaining stake (25%) held by Black Star Holdings Limited, a private limited company registered in England and Wales. A stand-alone analytical approach was followed given the entity’s less than majority revenue and asset contribution to the group, which stood at 33% and 17% at FY21, respectively.

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Ghana’s 5% Financial Sector clean-up levy set to moderate bank profitability (April 2021)

Overview

  • The 2021 budget statement presented to the Ghanaian parliament on 12 March proposed the introduction of a financial sector clean-up levy of 5% of banks’ profit before tax, intended to help defray outstanding commitments in the sector. The levy will be reviewed in 2024.
  • Meanwhile, on 31 March 2021, the Ghanaian president signed into law five other taxation laws and amendments affecting the general economy which were in-line with various measures introduced by the Government of Ghana in the 2021 Budget to rebuild Ghana’s public finances.
  • GCR believes, Ghanaian banks are well-positioned to absorb the initial impact of the increased tax cost from the 5% Financial Sector clean-up levy. However, increased asset quality risk from borrowers further pressured by the new tax initiatives in addition to the economic effects of the coronavirus pandemic may strain the financial sector. Return on Assets (after tax) was 2.8% at December 2020, we forecast a moderation to 2.6% at 31 December 2021.
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Letshego Ghana Savings and Loans PLC – October 2021

Letshego Ghana Savings and Loans PLC (“Letshego Ghana”, “the company”) rebranded in September 2019 from AFB Ghana Plc (“AFB Ghana”) after acquisition by Letshego Holdings Limited (“LHL”). The company began operating in 2009 as a non-bank financial institution (“NBFI”), providing unsecured consumer finance to the under-banked market (i.e., small/micro businesses and individuals).

The analytical approach is based on a mixture of the bank’s standalone credit analysis and Group support characteristics. Letshego Ghana is wholly owned by LHL which is headquartered and listed in Botswana delivering finance solutions to populations across 11 Sub Saharan Markets. The Group does not operate as one holistic operating structure as the group’s entities are largely operationally self-sufficient, and there is no cross-default clauses or large direct credit linkages.

The company operated exclusively in Ghana, through approximately 27 deposit-taking branches and over 194 employees at 31 December 2020. Principal financial solutions are deduction at source (“DAS”) payroll loans.

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