GCR has accorded MOZRE Moçambique Resseguros, S.A (“Moz Re”) a first time national scale Metical currency claims paying ability rating of BBB- (triple B minus), and an international scale US$ currency claims paying ability rating of B (single B). The international credit rating was constrained by Mozambique’s non investment grade sovereign rating of B+.
Moz Re was established in 2007, and is the only domestically registered reinsurer in the Mozambican market. In according the ratings, cognisance was taken of the fact that Moz Re forms part of a larger reinsurance group, providing technical support. The reinsurer’s majority shareholders are Malawi Re (51%) and Continental Re (19%), and also include IGEPE and local insurer EMOSE.
Following continued strong growth at the net level, and in the absence of any meaningful capital accumulation, international solvency has rapidly decreased since inception, to a low of 36% at FYE10 (and is expected to remain subdued over the medium term). Furthermore, statutory solvency only marginally covered the minimum requirement at FYE10. Cognisance was also taken of the reinsurer’s relatively aggressive risk appetite, indicative of a significant degree of capital risk.
While the fact that Moz Re maintains a conservative investment stance was positively considered, coverage of technical liabilities remained below 1x. Furthermore, concentration risk is evident given that around half of cash holdings are placed with a single counterparty (36% of capital). Finally, given the limited size of the short term insurance markets in which the reinsurer participates, a high degree of concentration risk is evident in terms of the client portfolio
Marc Joffe https://globalratings.net/uploads/files/June_2011.pdf
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