national scale ZAR currency claims paying ability rating accorded to Etana Insurance Company Limited (“Etana”) has been affirmed at A+ (single A plus).
Etana has achieved a robust GWP compound annual growth rate of 36% between F08 and F11 (well in excess of industry compound growth of 6% for the corresponding period), leveraging off the track record of its specialised underwriting team. The highly regarded management team comprises former Hollard group senior executives and experienced technical managers, and is supported by a nationwide broker network. As such, the insurer increased its market share to 2.6% in F11 (F07: 1%), solidifying its market profile as a specialist commercial & corporate property insurer within the multiline sub-segment.
Solvency remained adequate, and supports the current rating based on GCR’s internal capital adequacy model. Cognisance is taken of the reinsurance arrangement with Hollard, which is expected to support solvency during the medium term growth phase. Furthermore, capitalisation is supported by the insurer’s conservative investment approach, which also facilitates sound liquidity metrics. In addition, returns from unlisted preference share vehicles enhance operating profitability.
Etana has recorded underwriting profitability in excess of peer group norms throughout the review period, underpinned by a relatively stable earned loss ratio. However, the reliance on proportional reinsurance to support solvency has resulted in a loss of cost efficiencies and a lower degree of operating flexibility. Additionally, note is taken of the large concentration to property and motor (combined 69% of NPE), which increases underwriting volatility.
Marc Chadwick https://globalratings.net/uploads/files/Insights_Jan_2012.pdf
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