2013-12-19 19:35:01 -
A.M. Best Europe – Rating Services Limited has revised the outlook to positive from stable and affirmed the financial strength rating of B (Fair) and issuer credit rating of “bb” of Ghana Reinsurance Company Limited (Ghana Re) (Ghana).
The positive outlook reflects Ghana Re’s improving domestic profile and declining levels of outstanding premium debtors. Following the repeal of compulsory legal cessions in 2008, Ghana Re experienced a decline in its domestic profile, as cedants reassessed their reinsurance strategies.
Gross written premiums (GWP) are expected to rise by approximately 10% to GHS 75 million in 2013, compared to GHS 50 million in 2008, supported by opportunities associated with the domestication of life business, as well as the rise in investments in infrastructure
and construction, largely due to the discovery of oil and gas reserves in the country.
Growth is expected to continue at an annual rate of approximately 15% in the near term.
Over the same period, Ghana Re has demonstrated consistent improvements in the level of exposure to outstanding premium debtors. Premium receivables decreased to 36% of GWP in 2012, compared to 74% at its highest point in 2008. Additionally, the absolute amount of outstanding premium debtors declined in 2012, despite significant growth in premium volumes in the year. These improvements demonstrate the efforts taken by Ghana Re to implement stringent procedures to support premium collection. Ghana Re remains exposed to payment delays across its targeted markets and will be expected to sustain these improvements as it expands.
The ratings of Ghana Re also consider its strong risk-adjusted capitalisation, which is expected to continue to be supported by retained earnings, and solid operating performance.
Positive rating actions will be dependent on Ghana Re’s ability to sustain the above mentioned improvements over the medium-term period.
Deterioration in operating performance and/or risk-adjusted capitalisation to levels outside of A.M. Best’s expectations could result in negative rating actions. Additionally, a decline in the economic fundamentals of Ghana could also result in downward ratings pressure.
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 www.ambest.com/ratings/methodology : cts.businesswire.com/ct/CT?id=smartlink&url=http%3A%2F%2Fwww ..
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