International credit rating agency, Global Credit Ratings (GCR), has reaffirmed Coface South Africa Insurance Company's (Coface ZA) claims paying ability rating of AAA, the highest possible rating achievable.
Coface ZA is a leading player in the domestic and export credit insurance market. The company is a wholly-owned subsidiary of Compagnie Francaise d'Assurance pour le Commerce Exterieur (Coface), which has established itself as one of the world's largest players in trade credit insurance and receivables management and has representation in 95 counties.
Notwithstanding its short history as an underwriter, the company continued to post solid underwriting profit, while recording robust growth within the year under review.
Vaughan Jones, analyst at GCR, said in a statement: "The support provided by the insurer's parent company, which is internationally rated in the AA band, lent significant weight to the rating. Furthermore, Coface ZA demonstrated a significant improvement in its financial performance, with net profit well ahead of its initial budget.
"In addition to the existing rampant growth, the experienced and very capable management team has positioned the company well for further growth going forward."
He added: "On the back of the significant increase in net premium income, the international solvency margin fell in line with management's target of 30% to 33%, while the statutory solvency margin also evidenced a decline to 46% from the 67% recorded in the previous year. Furthermore, cognisance was taken of the flexible relationship Coface ZA has with its holding company, in terms of accessibility to additional capital."
Notwithstanding the above, Jones noted, due to the interest-rate sensitive and cyclical nature of the credit insurance industry, an increased level of risk is implied. In addition to this, the increased competition in the credit risk insurance market of late will inevitably place pressure on pricing going forward.
Share
Editorial contacts