GCR has maintained the national scale claims paying ability rating of Centriq Insurance Company Limited (“Centriq”) at A+(ZA) (single A plus).
The rating was supported by Centriq’s position as a top tier player in the cell captive and alternative risk transfer segment, with an estimated 20% market share. Furthermore, the reinsurance capacity provided by Santam is expected to support growth in its focused market segment over the medium to longer term. A significant factor underpinning this rating is the R50m draw down facility from Santam, which ensures that the minimum capital adequacy requirement remains above 1x. The implied capital support given the flexibility of this facility is favourably viewed. As such, going forward, promoter solvency is expected to remain at adequate levels to support the current rating.
Sustained by relatively stable fee and investment income, the insurer has been consistently profitable at the promoter level. Note is, however, taken of the expected growth strategy of gradually increasing their risk participation across the various portfolios of business, which may introduce a higher degree of earnings volatility. The conservative investment portfolio and sound liquidity metrics were favourably viewed and are a supporting factor to this rating. Note was taken of the fact that the insurer is exposed to credit risk stemming from the net liability position in certain cells. This increases capital risk and could limit capacity for longer term growth at the promoter level. Cognisance is, however, taken of the insurer actively managing the shortfall with those third party cells.
CREDIT RATINGS ISSUED AND RESEARCH PUBLICATIONS PUBLISHED BY GCR, ARE GCR’S OPINIONS, AS AT THE DATE OF ISSUE OR PUBLICATION THEREOF, OF THE RELATIVE FUTURE CREDIT RISK OF ENTITIES, CREDIT COMMITMENTS, OR DEBT OR DEBT-LIKE SECURITIES. GCR DEFINES CREDIT RISK AS THE RISK THAT AN ENTITY MAY NOT MEET ITS CONTRACTUAL AND/OR FINANCIAL OBLIGATIONS AS THEY BECOME DUE. CREDIT RATINGS DO NOT ADDRESS ANY OTHER RISK, INCLUDING BUT NOT LIMITED TO: FRAUD, MARKET LIQUIDITY RISK, MARKET VALUE RISK, OR PRICE VOLATILITY. CREDIT RATINGS AND GCR’S OPINIONS INCLUDED IN GCR’S PUBLICATIONS ARE NOT STATEMENTS OF CURRENT OR HISTORICAL FACT. CREDIT RATINGS AND GCR’S PUBLICATIONS DO NOT CONSTITUTE OR PROVIDE INVESTMENT OR FINANCIAL ADVICE, AND CREDIT RATINGS AND GCR’S PUBLICATIONS ARE NOT AND DO NOT PROVIDE RECOMMENDATIONS TO PURCHASE, SELL OR HOLD PARTICULAR SECURITIES. NEITHER GCR’S CREDIT RATINGS, NOR ITS PUBLICATIONS, COMMENT ON THE SUITABILITY OF AN INVESTMENT FOR ANY PARTICULAR INVESTOR. GCR ISSUES ITS CREDIT RATINGS AND PUBLISHES GCR’S PUBLICATIONS WITH THE EXPECTATION AND UNDERSTANDING THAT EACH INVESTOR WILL MAKE ITS OWN STUDY AND EVALUATION OF EACH SECURITY THAT IS UNDER CONSIDERATION FOR PURCHASE, HOLDING OR SALE.
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