AM Best affirms ratings of SociE[umlaut]tE[umlaut] Centrale de RE[umlaut]assurance.
AM Best said it has affirmed the financial strength rating of B++ (Good) and issuer credit rating of "bbb" of Societe Centrale de Reassurance (SCR) (Morocco). The outlook for both ratings is stable.
AM Best said the ratings reflect SCR's strong business position and adequate risk-adjusted capitalisation. An offsetting factor is the volatile underwriting experience on its life portfolio from reserve adjustments and dependence on a relatively high level of soft capital in the form of unrealised capital gains, which is subject to the local stock market volatility.
AM Best said it believes that SCR's business position as Morocco's national reinsurer remains consistent, despite the progressive phasing out of SCR's compulsory cession following the signing of a free trade agreement with an impact on the gross written premiums that are likely to fall to MAD 2.4 billion ($307 million) in 2009.
"The continued growth in conventional business-both in the domestic and foreign markets-is likely to partially mitigate the loss of compulsory cession business prospectively," the rating agency said, adding that it expects SCR's risk-adjusted capitalisation to remain adequate and is also likely to benefit from the increase in investment in mutual funds.
SCR's profit before tax improved by 22 per cent to MAD 477 million ($60 million) in 2008 as a result of the release in life reserves. The company's non-life operating results improved to MAD 505 million in 2008, but going forward, the combined ratio is expected to deteriorate slightly by one percentage point to approximately 100 per cent in 2009. This is mainly from an increase on commission payable to intermediaries to attract further conventional business as the company replaces its legal cessions and assumes further risks abroad.
2009 CPI Financial. All rights reserved.
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