Johannesburg, 22 May 2013 — Global Credit Ratings has today affirmed the national scale claims paying ability rating assigned to GA Angola Seguros S.A. of A(AO); with the outlook accorded as Positive. The rating(s) are valid until 5/2014.
Global Credit Ratings has accorded the above credit rating(s) on GA Angola Seguros S.A. based on the following key criteria:
GA Angola Seguros S.A. (“GA”) is the third largest insurer in the Angolan short term market, writing mainly commercial risks. The insurer’s head office is based in Luanda, with ten branches located across key regions of the country.
The strong growth trajectory evidenced over the review period has enabled the insurer to establish itself as a leading player in the Angolan insurance industry. This has been supported by strong branding, well entrenched corporate relationships and a high service level offering. Sound internal capital generation over the review period has led to a strengthening in key credit protection measures, with the risk adjusted capitalisation measure rising to a review period high in F12. Note is taken of significant solvency relief and protection provided by the reinsurance structure, given the prominence of high value multinational risks. Liquidity measures have been maintained at robust levels throughout the review period, underpinned by the adoption of a conservative investment strategy. The insurer has consistently registered underwriting profits over the review period, supported by a low claims experience. This is attributable to a disciplined underwriting approach, as well as the relative infancy of the Angolan insurance market. Going forward, domestic market maturation could see a deterioration in claims experience, which may lead to some degree of underwriting margin compression. Furthermore, financial flexibility is somewhat limited by the insurer’s high cost base.
Upward movement of the rating could develop through the maintenance of sound underwriting disciplines over the medium term, coupled with increased penetration into the SME and personal lines market, thus reducing reliance on heavily reinsured corporate accounts and improving risk diversification. The achievement of F13 projections, whilst maintaining key financial metrics at similar levels would also be viewed positively. In terms of a downward movement, this could be induced by a deterioration in underwriting performance over a prolonged period, either through prohibitive costs or increasing claims, as the domestic market matures. Further, a material change in the investment strategy and/or increasing capital at risk would likely impact adversely on the rating.
NATIONAL SCALE RATINGS HISTORY
Initial rating (Jun/2006)
Claims paying ability: BBB+(AO)
Outlook: Rating watch
Last rating (Sep/2012)
Claims paying ability: A(AO)
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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.
GA Angola Seguros S.A. participated in the rating process via face-to-face management meetings, teleconferences and other written correspondence. Furthermore, the quality of info received was considered adequate and has been independently verified where possible.
The credit rating/s has been disclosed to GA Angola Seguros S.A. with no contestation of the rating.
The information received from GA AngolaSegurosS.A. and other reliable third parties to accord the credit rating included the latest audited annual financial statements (plus four years of comparative numbers), latest internal and/or external report to management, full year detailed budgeted financial statements, most recent year to date management accounts, the current year reinsurance/retrocession cover notes, actuarial valuation statement, debtors provisioning policy document, ERM processes/framework (including catastrophe management framework), reserving methodologies, capital management policy.
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