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A.M. Best has revised the outlook to positive from stable and affirmed the financial strength rating of B (Fair) and the issuer credit rating of "bb+" of Mansard Insurance Plc (Mansard) (Nigeria).
The positive outlook reflects Mansard’s consistently excellent underwriting performance, as demonstrated by the five-year average combined ratio of 86.5%. Technical results have been maintained despite the company’s rapid growth in recent years and increasingly competitive conditions in its domestic market. For the first nine months of 2014, Mansard reported a technical profit of approximately NGN 900 million (USD 5.3 million) compared with NGN 500 million (USD 3.0 million) for the same period in 2013, underpinned by a rise in premium income and an improvement in the combined ratio. A.M. Best expects Mansard’s underwriting earnings to remain strong, supported by its solid competitive position as a top five composite insurer in Nigeria, its wide and expanding distribution network, including bancassurance agreements with several domestic high profile financial institutions, and its effective risk management practices.
The ratings also reflect Mansard’s solid risk-adjusted capitalisation, which has been sustained by retained earnings and the de-risking of its investment portfolio. In past years, Mansard’s risk-adjusted capitalisation has been constrained by investments in unlisted equities and property. However, the company has made a concerted effort to reduce its exposure to both asset classes. Based on unaudited accounts for the third quarter of 2014, Mansard reduced its exposure to unlisted equities and property investments to 27% of its total investments, compared with 36% at year-end 2013. Proceeds have been reinvested in cash, short-term deposits and fixed-income securities.
Positive rating actions could occur if Mansard maintains its strong earnings profile as it expands, whilst sustaining solid risk-adjusted capitalisation. These drivers will be monitored by A.M. Best over the next 24 to 36 months.
A decline in Mansard’s technical performance and risk-adjusted capitalisation or a material rise in its investment risk appetite could result in negative rating actions. Additionally, any impact on Mansard’s rating fundamentals due to deterioration in the political or socio-economic conditions in Nigeria could also negatively affect its ratings.
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.
Key insurance criteria reports utilised:
Catastrophe Analysis in A.M. Best Ratings
Equity Credit for Hybrid Securities
Evaluating Non-Insurance Ultimate Parents
Evaluating Country Risk
Insurance Holding Company and Debt Ratings
Rating Members of Insurance Groups
Risk Management and the Rating Process for Insurance Companies
Understanding BCAR for Property/Casualty Insurers
Understanding Universal BCAR
In accordance with Regulation (EC) No. 1060/2009, the following is a link to required disclosures: A.M. Best Europe - Rating Services Limited Supplementary Disclosure.
This rating announcement has been issued by A.M. Best Europe – Rating Services Limited, which is a subsidiary of A.M. Best Company. A.M. Best Company is the world's oldest and most authoritative insurance rating and information source. For more information, visit www.ambest.com.
Copyright © 2014 by A.M. Best Company, Inc. ALL RIGHTS RESERVED.
Contacts
A.M. Best Company, Inc.
Nicola Gaisford
Financial Analyst
+(44) 20 7397 0306
nicola.gaisford@ambest.com
or
Deniese Imoukhuede
Associate Director - Analytics
+(44) 20 7397 0277
deniese.imoukhuede@ambest.com
or
Christopher Sharkey
Manager, Public Relations
+(1) 908 439 2200, ext. 5159
christopher.sharkey@ambest.com
or
Jim Peavy
Assistant Vice President, Public Relations
+(1) 908 439 2200, ext. 5644
james.peavy@ambest.com
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