Credit rating agency, AM Best has assigned a stable outlook to four Nigerian Insurers; African Reinsurance corporation, AXA Mansard Insurance Plc, Continental Reinsurance Plc and Custodian and Allied Insurance Limited.
This is contained in its December 2021 ratings which captured the credit ratings of insurers and reinsurers in over 90 countries and accessed by Nairametrics.
According to AM Best, the credit ratings are effective as of 30th November 2021.
Highlights of the report
The report projects the outlook implication of the Nigerian insurer based on the Financial Strength Rating (FSR)and the Issuer Credit Rating (ICR).
Under the ICR, the insurers were awarded outlook as follows; African Reinsurance Corporation (a), AXA Mansard Insurance Plc (bbb-), Continental Reinsurance Plc (bbb-) and Custodian and Allied Insurance Limited (bb+)
Similarly, on the FSR, the insurers were accorded outlook as follow; African Reinsurance Corporation (A), AXA Mansard Insurance Plc (B+), Continental Reinsurance Plc (B+) and Custodian and Allied Insurance Limited (B).
What this means
Irrespective of individual credit scores, all 4 carriers have a stable outlook, meaning that the firms have reasonable level of financial backings and also possess some cash reserves.
African Reinsurance Corporation (A) have a stable outlook for the future with a low-risk default for investors as the reinsurer possess an excellent financial capacity to meet ongoing requirement.
AXA Mansard Insurance Plc and Continental Reinsurance Plc have a good ability to meet their ongoing financial obligation though credit quality is vulnerable to adverse change in the industry and economic condition.
What you should know
- Credit ratings consist of the Financial Strength Rating (FSR); an independent opinion of an insurer’s financial strength and ability to meet ongoing insurance policy and contract obligations as well as Issuer Credit Rating (ICR); an independent opinion of an entity’s ability to meet its ongoing financial obligation, issued on long or short term basis.
- The FSC is based on adjusted policyholders’ surplus in the US dollar and may be impacted by foreign currency fluctuations.
- Also, the FSC is designed to provide a convenient indicator of the size of a company in terms of its statutory surplus and related account.