Announcements

GCR affirms The Anglo Mauritius Assurance Society Limited’s rating of AA-(MU); Outlook Stable

Johannesburg, 18 December 2014 — Global Credit Ratings has affirmed the national scale financial strength rating assigned to The Anglo Mauritius Assurance Society Limited of AA-(MU); with the outlook accorded as Stable. Furthermore, Global Credit Ratings has affirmed the international scale financial strength rating assigned to The Anglo Mauritius Assurance Society Limited of BBB; with the outlook accorded as Stable. The rating(s) are valid until September 2015.

SUMMARY RATING RATIONALE

Global Credit Ratings (“GCR”) has accorded the above credit ratings to The Anglo Mauritius Assurance Society Limited (“AMAS”) based on the following key criteria:

AMAS is a top tier player in the Mauritian life insurance and pension market, with a strong brand and established market presence. The assurer has registered continued strong and stable revenue growth, supported income from linked and non-linked products within the cross-sectional offering. Competitive positioning is viewed as a key rating strength that is expected to be sustained over the medium term.

GCR views AMAS’ risk-absorption capacity to be very high, and a key ratings strength. The assurer allocates large risk margins to the life fund in order to cater for additional insurance and asset risk. Life fund coverage of the actuarial value of insurance liabilities remained conservative at 1.2x, cementing the favourable historical trend observed. Furthermore, the assurer’s statutory valuation ratios have been recorded at healthy levels relative to risk-based capital requirements and stress test scenarios.

Asset liability matching is viewed to be very well managed, with the insurer displaying a high buffer of adjusted asset values over possible short term liability requirements. 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 also exhibits an adequate liquidity profile relative to operational requirements.

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+.

Upward movement of the rating or outlook could develop should the insurer achieve a sustained upward trend in market share, while attaining an enhanced level of earnings diversification. A strengthening in capital adequacy may further contribute to a medium term strengthening in the rating. 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.

For a detailed glossary of terms utilised in this announcement please click here

NATIONAL SCALE RATINGS HISTORY INTERNATIONAL SCALE RATING HISTORY
Initial rating (November 2013) Initial rating (November 2013)
Financial strength: AA-(MU) Financial strength: BBB
Outlook: Stable Outlook: Stable
Last rating (November 2013) Last rating (November 2013)
Financial strength: AA-(MU) Financial strength: BBB
Outlook: Stable Outlook: Stable

ANALYTICAL CONTACTS

Primary Analyst
Marc Chadwick
Sector Head: Insurance
(011) 784-1771
Chadwick@globalratings.net

Committee Chairperson
Sheri Few
Senior Analyst: Insurance
(011) 784-1771
Few@globalratings.net

APPLICABLE METHODOLOGIES AND RELATED RESEARCH

Criteria for Rating Insurance Companies, Updated July 2014

AMAS rating report 2013.

Swan Insurance Company Limited (“Swan”) rating reports 2013 – 2014.

RATING LIMITATIONS AND DISCLAIMERS

ALL GCR’S CREDIT RATINGS ARE SUBJECT TO CERTAIN LIMITATIONS AND DISCLAIMERS. PLEASE READ THESE LIMITATIONS AND DISCLAIMERS BY FOLLOWING THIS LINK: HTTP://GLOBALRATINGS.NET/UNDERSTANDING-RATINGS. IN ADDITION, GCR’S RATING SCALES AND DEFINITIONS ARE ALSO AVAILABLE FOR DOWNLOAD AT THE FOLLOWING LINK: HTTP://GLOBALRATINGS.NET/RATINGS-INFO. GCR’S CODE OF CONDUCT, CONFIDENTIALITY, CONFLICTS OF INTEREST, PUBLICATION TERMS AND CONDITIONS AND OTHER RELEVANT POLICIES AND PROCEDURES ARE ALSO AVAILABLE AT HTTP://GLOBALRATINGS.NET.

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 2013 audited annual financial statements (plus four years of comparative numbers), full year detailed budgeted financial statements, unaudited year to date management accounts to June 2014, most recent independent actuarial valuations, the current year reinsurance summary, 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.

GCR affirms The Anglo Mauritius Assurance Society Limited’s rating of AA-(MU); Outlook Stable

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