Johannesburg, 18 Dec 2013 — Global Credit Ratings has today assigned an initial national scale financial strength rating of AA-(MU) to The Anglo Mauritius Assurance Society Limited; with the outlook accorded as Stable. Furthermore, Global Credit Ratings has assigned an initial international scale financial strength rating of BBB to The Anglo Mauritius Assurance Society Limited; with the outlook accorded as Stable. The rating(s) are valid until 9/2014.
Global Credit Ratings has accorded the above credit rating(s) on The Anglo Mauritius Assurance Society Limited based on the following key criteria:
The Anglo Mauritius Assurance Society Limited (“AMAS”) is a top tier player in the Mauritian life insurance and pension market, with a strong brand and established market presence. Accordingly, competitive positioning is viewed as a key rating strength that is expected to be sustained over the medium term. AMAS offers products across all three areas of the Mauritian long term assurance arena, namely life assurance, pension products and unit linked products. The assurer’s cross-sectional offering has cemented the entity’s top tier market position, reflecting a premium market share of 19% in F12, and an asset market share of 27%.
The assurer’s statutory valuation ratios have been recorded at healthy levels relative to risk-based capital requirements and stress test scenarios. Furthermore, AMAS’ exposure to capital market volatility in terms of market-linked products is limited by the transfer of risk exposure to policyholders for the majority of offerings, with the associated assets and liabilities ring-fenced within the life fund. AMAS exhibits an adequate liquidity profile relative to regional norms and operational requirements. Asset liability matching is also viewed to be appropriately managed.
The assurer has been consistently profitable at the operating line, underpinned by an overall contained benefit pay-out experience. Additionally, the delivery cost ratio has been contained within a relatively narrow band over the review period. AMAS’ reinsurance programme utilises counterparties of high credit quality, reflecting secure ratings on an international scale. Additionally, maximum net deductibles per risk and event are limited to levels that are viewed as conservative.
The Group’s medium term operational strategy centres on diversification by way of both geographic spread and business type, facilitated by privately held insurance and finance related assets. While GCR recognises the strategic value of these investments, and the potential for medium term realisation of business spread, they do imply a high degree of industry concentration risk, as well as execution and capital risk associated with start-up entities. Accordingly, the strength of management’s strategic implementation represents a key rating consideration through this expansionary cycle. The international scale rating incorporates the impact of Mauritius’ sovereign rating of BBB+ (applicable to both local and foreign currency ratings).
Upward movement of the rating or outlook could develop should the assurer achieve a sustained upward trend in market share, particularly within the non-linked market segment. A strengthening in capital adequacy, and/or a reduction in guarantees borne by the assurer, may further contribute to a medium term strengthening in the rating. Conversely, downward rating pressure would emanate from a substantial and sustained weakening in capital adequacy and liquidity metrics to levels outside of GCR’s parameters for the current band. A material loss of market share, or deterioration in earnings capacity, may also give rise to negative rating pressure.
|Regional Sector Head: Insurance|
|+27 11 784 1771|
|Sector Head: Financial Institution Ratings|
|+27 11 784 1771|
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SALIENT FEATURES OF ACCORDED RATINGS
GCR affirms that a.) no part of the rating was influenced by any other business activities of the credit rating agency; b.) the rating was based solely on the merits of the rated entity, security or financial instrument being rated; c.) such rating was an independent evaluation of the risks and merits of the rated entity, security or financial instrument.
The Anglo Mauritius Assurance Society Limited participated in the rating process via face-to-face management meetings, teleconferences and other written correspondence. Furthermore, the quality of information received was considered adequate and has been independently verified where possible.
The credit rating/s has been disclosed to The Anglo Mauritius Assurance Society Limited with no contestation of the rating.
The information received from The Anglo Mauritius Assurance Society Limited and other reliable third parties to accord the credit rating included the 2012 audited annual financial statements (plus four years of comparative numbers), full year detailed budgeted financial statements, unaudited year to date management accounts to June 2013, actuarial valuations for 2011 and 2012, the current year reinsurance cover notes, investment guidelines, debtors provisioning overviews, corporate governance framework, reserving overviews, statutory annual returns, statutory solvency returns, and other related rating information.
The ratings above were solicited by, or on behalf of, the rated client, and therefore, GCR has been compensated for the provision of the ratings.