Due to the Covid-19 pandemic, 2020 was a highly uncertain year with risks of premium growth contraction and earnings strain in the Kenyan insurance industry viewed to be elevated, noting pre-existing pressures. However, given better than expected 3Q 2020 industry performance displayed in the Insurance Regulatory Authority quarterly report, national scale relativities are broadly expected to remain consistent with previous periods and the stable outlooks are viewed to be well supported going into 2021.
Key highlights of the research are:
In 2020, GCR placed 11 insurers (including three reinsurers) on stable outlooks; one on evolving outlook; and six on negative outlooks, reflecting group and company asset and debt exposures as well as corporate reorganisations.
GCR also lowered the Kenyan country and insurance sector risk scores in 2020, due to the indirect impact of COVID-19, a restrained economy and other industry specific challenges. As a result, there has been, in our opinion, a general deterioration in creditworthiness at an international scale level.
However, national scale relativities broadly remain consistent to previous periods and the stable outlooks are viewed to be well supported going into 2021, with better than expected premium growth and profitability in 3Q 2020. Furthermore, the majority of GCR rated insurers display healthy solvency levels well above the minimum regulatory and GCR capital adequacy requirement (“CAR”) ratio of 100% at end- 2019.
GCR will periodically provide insights on key sectors/industries across different territories in which various rated entities are domiciled, encompassing changes in the operating environment, performance trends and its view of the impact of an evolution in market dynamics on the credit risk profiles of rated entities in selected industries.
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.