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A.M. Best Affirms Ratings of ZEP-RE (PTA Reinsurance Company)

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© Business Wire 2013
2013-12-06 17:31:03 -

A.M. Best Europe – Rating Services Limited has affirmed the financial strength rating of B+ (Good) and issuer credit rating of “bbb-” of ZEP-RE (PTA Reinsurance Company) (ZEP-RE) (Kenya). The outlook for both ratings remains stable.

The ratings of ZEP-RE reflect its strong risk-adjusted capitalisation, solid and consistent operating performance and established competitive position within its regional reinsurance market.

Several anticipated capital injections, coupled with a good retention of earnings in 2013, are expected to sustain risk-adjusted capitalisation at a sufficiently strong level to support a projected annual rise in gross written premium of approximately 20% in the near term.

Operating results for 2013 are expected to remain solid, albeit lower than the pre-tax profit of USD 11.7 million reported in 2012. Net

earnings as at the third quarter of 2013 decreased by 33% to USD 8 million due to ZEP-RE’s exposure to a high incidence of large single risk losses. Nonetheless, a more benign claims environment during the fourth quarter of 2013 and higher investment income, driven by an expanded asset base, are expected to support ZEP-RE’s overall performance for the full year.

ZEP-RE’s good competitive standing in the southern and eastern regions of Africa is enhanced by its privileged access to business. Although ZEP-RE is entitled to accept 10% of all treaty business ceded in some of its markets, the company is not unduly reliant on these cessions to support its expansion.

Upward rating pressure could occur if ZEP-RE continues to demonstrate profitable growth over the long term whilst maintaining risk-adjusted capitalisation at a supportive level. A decline in the company’s financial profile, either through a deterioration in operating results, quality of its retrocessionaires and/or weakening risk-adjusted capitalisation could result in negative pressure on ZEP-RE’s ratings.
Additionally, an erosion in the economic conditions and business environment in the countries where ZEP-RE operates could negatively impact the ratings.

The methodology used in determining these ratings is Best’s Credit Rating Methodology, which provides a comprehensive explanation of A.M.

Best’s rating process and contains the different rating criteria employed in the rating process. Best’s Credit Rating Methodology can be found at : .. .

In accordance with Regulation (EC) No. 1060/2009, the following is a link to required disclosures: A.M.

Best Europe - Rating Services Limited Supplementary Disclosure : .. .

A.M. Best Europe – Rating Services Limited is a subsidiary of A.M.

Best Company. A.M. Best Company is the world's oldest and most authoritative insurance rating and information source. For more information, visit : .. .

Copyright © 2013 by A.M. Best Company, Inc. ALL RIGHTS RESERVED.

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A.M. Best Europe – Rating Services LimitedKonstantin

LangowskiAssociate Financial Analyst+(44) 20

7397 0318 : orDeniese

ImoukhuedeAssociate Director+(44) 20 7397 0277 : orRachelle

MorrowSenior Manager, Public Relations+(1) 908

439 2200, ext. 5378 : orJim

PeavyAssistant Vice President, Public Relations+(1)

908 439 2200, ext. 5644 :

Hossam Abdel-Kader
Phone: +43 1 9582319

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