A.M Best affirms ‘B’ rating on Ghana Reinsurance’s financial strength

Mr. Gustav Siale – CEO of GhanaRe

The global insurance rating agency, A.M. Best has affirmed the financial strength rating of “B” (Fair) and issuer credit rating of “BB” of Ghana Reinsurance Company Limited (Ghana Re) as its outlook for both ratings remains stable.

The ratings of Ghana Re, according to A.M. Best, reflect its excellent level of risk-adjusted capitalisation and good operating performance.

In a statement January 8, 2013, the rating service said “these strengths are offset by Ghana Re’s weakened, albeit stabilizing business profile and high amount of premium debtors.”

It adds “The ratings also consider Ghana Re`s exposure to the high political, economic and financial system risks associated with its operation in sub-Saharan Africa.”

In its opinion, A.M Best indicated that Ghana Re`s level of risk-adjusted capitalisation has remained at an excellent level, supported by retained earnings and going forward “risk-adjusted capitalisation is expected to be maintained at a sufficiently strong level to support Ghana Re`s business plans”.

It noted that Ghana Re`s operating performance remained at a good level with GH¢8.8 million, despite the significant losses from the floods that occurred in Accra in October 2011.

“In 2011, Ghana Re`s business volume stabilized,” A.M. Best said and for 2012 “Ghana Re is expected to return to growth and to report consolidated gross written premiums of approximately GH¢60 million (2011: GH¢49 million).”

According to the agency, Ghana Re may get positive rating if there are improvements in its business profile whilst maintaining a strong level of risk-adjusted capitalisation and good underwriting performance.  While downward rating pressures may be triggered by a worsening of Ghana Re`s risk-adjusted capitalisation or deterioration in its business profile.

In A.M. Best`s opinion, adequate procedures are not yet in place to improve premium collection.

By Ekow Quandzie

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