This archive report was first published on 12 July 2020.
Published on July 12, 2020, Global Credit Ratings (GCR) has given a favourable rating to Kenya Reinsurance's (Kenya Re) financial strength.
According to GCR, Kenya Re reflected sound liquidity, solid business profile, and risk-adjusted capitalisation, earning an AA+ rating with a stable outlook.
"The entity demonstrated a strong financial profile, while business profile remained at intermediate levels, with small and risky presences in foreign markets diluting entrenched strong domestic market position," said GCR in a statement.
Kenya Re's capitalisation was assessed within a strong range, despite unrealised property revaluation gains supporting a strong capital growth of 13 per cent to Sh31 billion ($315 million) in the 2019 financial year, up from Sh28 billion ($275 million) in 2018.
However, GCR warned that operating cash requirements, which rose 18 per cent due to claims pressures, could further restrain liquidity metrics and assessment over the medium term, amidst economic challenges hindering cash collections.
Despite this, GCR noted that Kenya Re's business profile remained unchanged within intermediate levels, characterised by a strong presence in Kenya diluted by limited competitiveness in foreign markets.
While a rating upgrade was unlikely "over the medium term," GCR said containment of earnings risk by Kenya Re could be "viewed positively" if stability in liquidity and risk-adjusted capitalisation were maintained.
