GCR Assigns the Zimbabwean Medical Schemes Sector Risk Score
Johannesburg, 16 July 2021: GCR Ratings (“GCR”) has assigned the Zimbabwean Medical Schemes Sector Risk Score of 1.75. The score is underpinned by very limited regulatory oversight and transparency on industry performance, albeit evidencing low risk to earnings. However, we still see downside risk to membership levels amidst ongoing economic challenges.
The Medical Schemes sector risk score (ranging from 0 to 15) is a key factor in the operating environment component score. The core of the GCR Ratings Framework is based on GCR’s opinion that an entity’s operating environment largely frames its creditworthiness. As a result, the operating environment analysis anchors risk scores under the GCR rating methodology. GCR combines elements of the country risk and sectoral risk analysis to anchor a medical scheme to its current operating conditions. For more details on any of the above, please read the related criteria and research listed below.
GCR will periodically publish an updated “GCR Zimbabwean Medical Schemes Sector Risk Score”.
Zimbabwean Medical Schemes Sector Risk Score
Zimbabwean Medical Schemes, Sector Risk Score 1.75. Country Risk Score 0*, Mapping Table 0.0 to 1.00
The Zimbabwean medical schemes sector risk score of 1.75 is restrained by a weak regulatory environment, evidenced by limited regulatory framework, enforcement and implementation to support, guide, and control schemes’ activities. Furthermore, note was taken of low levels of transparency, with limited track record on industry performance. Nevertheless, earnings risks are viewed to be low, stabilised by contribution increases in line with inflation. In this respect, industry density is in line with mature regional peers at around USD250, although corresponding to a very low penetration at around 0.2% which is expected to remain constrained given that industry growth potential likely to be subdued by additional economic challenges emanating from the COVID-19 pandemic. The Zimbabwean medical scheme industry presents an oligopolistic structure, dominated by three major schemes collectively accounting for about 75% of industry contributions whilst the remainder is fragmented amongst the rest of players. This structure is expected to be maintained going forward, underpinned by high barriers to entry embedded in the historical development of the industry.
*Country risk score as at date of publication.
Group Head of Ratings
Johannesburg, South Africa
+27 11 784 1771
Analyst: Insurance Ratings
Johannesburg, South Africa
+27 11 784 1771
Related criteria and research
Criteria for the GCR Ratings Framework, May 2019
Criteria for Rating Insurance Companies, May 2019
GCR Ratings Scales, Symbols & Definitions, May 2019
GCR Country Risk Scores, July 2021
GCR Financial Institutions Risk Scores, June 2021
CREDIT RATINGS ISSUED AND RESEARCH PUBLICATIONS PUBLISHED BY GCR, ARE GCR’S OPINIONS, AS AT THE DATE OF ISSUE OR PUBLICATION THEREOF, OF THE RELATIVE FUTURE CREDIT RISK OF ENTITIES, CREDIT COMMITMENTS, OR DEBT OR DEBT-LIKE SECURITIES. GCR DEFINES CREDIT RISK AS THE RISK THAT AN ENTITY MAY NOT MEET ITS CONTRACTUAL AND/OR FINANCIAL OBLIGATIONS AS THEY BECOME DUE. CREDIT RATINGS DO NOT ADDRESS ANY OTHER RISK, INCLUDING BUT NOT LIMITED TO: FRAUD, MARKET LIQUIDITY RISK, MARKET VALUE RISK, OR PRICE VOLATILITY. CREDIT RATINGS AND GCR’S OPINIONS INCLUDED IN GCR’S PUBLICATIONS ARE NOT STATEMENTS OF CURRENT OR HISTORICAL FACT. CREDIT RATINGS AND GCR’S PUBLICATIONS DO NOT CONSTITUTE OR PROVIDE INVESTMENT OR FINANCIAL ADVICE, AND CREDIT RATINGS AND GCR’S PUBLICATIONS ARE NOT AND DO NOT PROVIDE RECOMMENDATIONS TO PURCHASE, SELL OR HOLD PARTICULAR SECURITIES. NEITHER GCR’S CREDIT RATINGS, NOR ITS PUBLICATIONS, COMMENT ON THE SUITABILITY OF AN INVESTMENT FOR ANY PARTICULAR INVESTOR. GCR ISSUES ITS CREDIT RATINGS AND PUBLISHES GCR’S PUBLICATIONS WITH THE EXPECTATION AND UNDERSTANDING THAT EACH INVESTOR WILL MAKE ITS OWN STUDY AND EVALUATION OF EACH SECURITY THAT IS UNDER CONSIDERATION FOR PURCHASE, HOLDING OR SALE.
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