South African agency, Global Credit Ratings (GCR), has announced it will no longer offer a rating for Saham Assurance Company Kenya, saying the withdrawal has been made at the behest of the insurer.
GCR’s final rating for Saham saw it affirm a claims paying ability rating of A-, with a negative outlook based on the assurance firm’s continued underwriting losses.
“The rating withdrawal was at the request of the client. Therefore, GCR will no longer provide ratings or analytical coverage for Saham Kenya,” said GCR in a statement.
“The negative outlook reflects Saham Kenya’s pressured earnings capacity. Suppressed earnings stem largely from limited scale efficiencies to absorb cost base effects…GCR expects earnings capacity to remain under pressure over the short term.”
The lack of a rating for a firm makes it difficult to raise additional capital should the need arise.
It was not immediately clear whether Saham will be looking to get a rating from another firm, with its chief executive offering little detail in response to queries on the rating withdrawal.
“We are still in discussions with the rating company,” said Saham chief executive officer Lydia Kibaara.
Although it offered a negative rating, GCR noted that Saham’s liquidity metrics remain at strong levels, underpinned by the insurer’s relatively conservative investment philosophy.
The insurer’s claims cash cover ratio stood at 61 months at the end of last year, up from 49 months in 2015.
GCR also noted that Saham has been trying to diversify its source of earnings, making concerted efforts to reduce the significant concentration on one line of business.
“Nevertheless, the competitive position remains limited, with the insurer accounting for about one per cent of short term industry gross premiums in 2016.
While potential growth in long term business presents a source of earnings generation, no significant changes in market share are expected over the rating horizon,” said GCR.
Last week, the South African firm also withdrew its rating of retailer Nakumatt Holdings, saying that the supermarkets chain had not provided comprehensive and sufficient information to enable it to determine an appropriate rating.
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Credit: Business Daily
