Johannesburg, 30 May 2014 — Global Credit Ratings has today affirmed the national financial strength rating assigned to CIC Life Assurance Ltd of A+(KE); with the outlook accorded as Stable. The rating(s) are valid until 05/2015.
SUMMARY RATING RATIONALE
Global Credit Ratings (“GCR”) has accorded the above credit rating(s) to CIC Life Assurance Ltd (“CIC Life”) based on the following key criteria:
CIC Life is a wholly owned subsidiary of the CIC Insurance Group Limited (“CIC Group”), which following the deconsolidation of group insurance activities (concluded at the start of 2012) focuses solely on life assurance business. At a 75% stake, the Co-operative Insurance Society Limited is the majority shareholder of CIC Group. The remaining 25% shares were listed on the Nairobi Stock Exchange in July 2012 and are spread across a number of individual investors.
The rating is supported by CIC Life’s well-entrenched position in the domestic life assurance market (3rd largest based on pure life products). This has been underpinned by its competitive edge within a niche business segment (the co-operative market), as well as the successful development of extensive conventional and alternate distribution channels. Furthermore, continued innovation in the product offering is expected to engender a sustainable growth platform over the longer term. The assurer displays an adequate solvency position, with both the statutory solvency margin and the actuarial surplus recorded at comfortable levels. Note is taken of the capital injection made in F13, with further capital additions projected for F14 in order to support planned business expansion. This notwithstanding, a more sophisticated capital management approach (developed in tandem with the improving risk management framework) would be positively considered by GCR. CIC Life has exhibited consistent profitability at the operating line, underpinned by a good benefit pay-out experience and relatively contained acquisition expense model. While a less conservative investment stance was adopted in F13, liquidity remains adequate. A relative duration mismatch between assets and liabilities is, however, noted and should be appropriately managed going forward, particularly as the business mix diversifies.
A positive change in the rating/outlook could develop from a sustained improvement in operating performance, and proven success in expanding product lines. Further, strong capital adequacy should be maintained, whilst internal risk management processes should be further refined (particularly capital and asset-liability management). Ratings pressure could arise from a weakening of the company’s franchise or capital position. Further, a marked deterioration of the assurer’s key operating metrics or a further weakening in the liquidity position may have a negative rating impact.
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NATIONAL SCALE RATINGS HISTORY
Initial rating (May/2013)
Financial strength: A+(KE)
Last rating (May/2013)
Financial strength: A+(KE)
Sector Head: Insurance
APPLICABLE METHODOLOGIES AND RELATED RESEARCH
Criteria for Rating Life Assurance Companies (July 2013)
CIC Life Assurance Limited (“CIC Life”) rating report 2013
CIC General Insurance Limited (“CIC General”) rating report 2013
RATING LIMITATIONS AND DISCLAIMERS
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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.
CIC Life Assurance Ltd 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 CIC Life Assurance Ltd with no contestation of the rating.
The information received from CIC Life Assurance Ltd and other reliable third parties to accord the credit rating(s) included the 2013 audited annual financial statements (plus four years of comparative numbers), full year detailed budgeted financial statements for 2014, year to date management accounts to March 2014, 2014 reinsurance cover notes, 2013 actuarial valuation statement, 2013 Financial Condition Report, Enterprise Risk Management policy document, business strategy report and other non-public statistical 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.