LONDON–(BUSINESS WIRE)–AM Finest has affirmed the Monetary Energy Score of B (Honest) and the Lengthy-Time period Issuer Credit score Score of “bb+” (Honest) of Custodian and Allied Insurance coverage Restricted (CAIL) (Nigeria). The outlook of those Credit score Scores (scores) is steady.
The scores mirror CAIL’s steadiness sheet energy, which AM Finest assesses as very robust, in addition to its robust working efficiency, restricted enterprise profile and marginal enterprise threat administration.
CAIL’s steadiness sheet energy is underpinned by risk-adjusted capitalisation that’s comfortably on the strongest degree, as measured by Finest’s Capital Adequacy Ratio (BCAR). Capital consumption is primarily pushed by asset threat, owing to the poor credit score high quality of debt issuers in Nigeria. The steadiness sheet energy evaluation additionally considers CAIL’s excessive reinsurance dependence, pushed by giant cessions on power and property dangers, in addition to its publicity to the excessive ranges of financial, political and monetary system dangers which are related to working in Nigeria.
CAIL’s robust working efficiency displays its strong total profitability and robust underwriting efficiency, as demonstrated by its five-year (2016-2020) weighted common mixed ratio of 89%. The corporate’s earnings are skewed towards funding earnings on account of its low underwriting leverage and the comparatively excessive rate of interest setting in Nigeria; funding earnings accounted for roughly 80% of the corporate’s pre-tax income over the previous 5 years. AM Finest expects CAIL to report strong outcomes once more for 2021, with the corporate recording a pre-tax revenue of NGN 4.2 billion (USD 13.5 million) for the primary three quarters of 2021, a modest NGN 0.4 billion enchancment in opposition to the identical interval in 2020.
CAIL has a powerful place in Nigeria’s market as one of many main non-life insurers, measured by gross written premium. Nonetheless, Nigeria’s insurance coverage market is of modest measurement by worldwide requirements and is topic to appreciable political, financial and monetary system dangers, making it a difficult working setting.
This press launch pertains to Credit score Scores which were revealed on AM Finest’s web site. For all ranking data referring to the discharge and pertinent disclosures, together with particulars of the workplace answerable for issuing every of the person scores referenced on this launch, please see AM Finest’s Latest Score Exercise net web page. For extra data concerning the use and limitations of Credit score Score opinions, please view Information to Finest’s Credit score Scores. For data on the correct use of Finest’s Credit score Scores, Finest’s Efficiency Assessments, Finest’s Preliminary Credit score Assessments and AM Finest press releases, please view Information to Correct Use of Finest’s Scores & Assessments.
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