A.M. Best Affirms Credit Ratings of Société Centrale de Réassurance
Charlotte Vigier, +44 20 7397 0270
Senior Financial Analyst
Ghislain Le Cam, CFA, FRM, +44 20 7397 0268
Christopher Sharkey, +1-908-439-2200, ext. 5159
Manager, Public Relations
Jim Peavy, +1-908-439-2200, ext. 5644
Director, Public Relations
A.M. Best has affirmed the Financial Strength Rating (FSR) of B++ (Good) and the Long-Term Issuer Credit Rating (Long-Term ICR) of “bbb” of Société Centrale de Réassurance (SCR) (Morocco). The outlook of these Credit Ratings (ratings) is stable.
The ratings reflect SCR’s solid risk-adjusted capitalisation, track record of strong technical performance and good domestic business profile in Morocco. The ratings also factor in SCR’s exposure to the macroeconomic and political conditions prevailing in Morocco, its core market.
SCR’s risk-adjusted capitalisation has improved in recent years to a solid level, following strong operating performance and a reduction in net underwriting risks chiefly stemming from the end of the legally required cession of business written by direct insurers in Morocco. Investment risk remains as SCR’s principal source of capital consumption, a result of an investment base heavily concentrated in Morocco, with significant exposure to domestic equities. A.M. Best expects SCR’s risk-adjusted capitalisation to remain at a solid level, despite the cost associated with the explicit guarantee provided by the Moroccan state in the form of high dividend requirements of its main shareholder, state-owned Caisse de Dépôt et de Gestion.
SCR has a track record of strong technical performance, as evidenced by a five-year (2012-2016) average non-life combined ratio of 85.6% (as per A.M. Best’s calculation). The company reported continued strong non-life technical performance in 2016, realising a non-life technical surplus of MAD 198 million (2015: MAD 215 million) in spite of a deterioration in its loss ratio to 58.6% from 53.1% in 2015. Profit before tax improved to MAD 427 million, up from MAD 217 million in 2015, driven by a strong investment result of MAD 257.7 million (MAD 78.8 million in 2015).
SCR has a leading domestic market position in Morocco’s reinsurance sector, built on the company’s original role as the national reinsurer supporting the local market. SCR’s business profile has come under pressure as a result of the liberalisation of the domestic market and the phasing out of the legally required cessions. Premium income is expected to drop below MAD 2 billion in 2017, compared with MAD 2.7 billion in 2014. However, A.M. Best expects the company to benefit from its role in the new natural catastrophe protection scheme in Morocco, due to take effect in 2018, and from the introduction of new compulsory lines of business in the Moroccan direct market. A.M. Best will continue to monitor the impact of SCR’s changing operational landscape and any impact this may have on the underlying rating fundamentals of the company.
This press release relates to Credit Ratings that have been published on A.M. Best’s website. For all rating information relating to the release and pertinent disclosures, including details of the office responsible for issuing each of the individual ratings referenced in this release, please see A.M. Best’s Recent Rating Activity web page. For additional information regarding the use and limitations of Credit Rating opinions, please view Understanding Best’s Credit Ratings. For information on the proper media use of Best’s Credit Ratings and A.M. Best press releases, please view Guide for Media - Proper [..].
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