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Category:
Insurance
News /
Short Term
Insurance /
Auto &
General
/ Feb. 2007
Auto
& General credit rating
upgraded to AA-
International credit rating agency
Global Credit Ratings ("GCR") has upgraded Auto & General Insurance
Company Limited’s (“Auto & General”) claims paying ability rating to
AA- (double A minus). The rating denotes a very high claims paying
ability, with very strong protection factors.
According to Melanie Brown, Managing
Director of GCR’s
African operations, the company’s low
delivery cost structure offers protection to underwriting margins in
a softening market. This is reflected by the rise in Auto &
General’s underwriting margin to a review period high of 16.5% in
F06, which was in contrast to the experience for the industry as a
whole. The Company’s solid underwriting performance over the
review period is further supported by its extensive statistical
database, covering 20 years of underwriting, coupled with Auto &
General’s demonstrated underwriting expertise. In addition, Brown
said that Auto & General’s
diversified distribution channel, combined with its position as a
leading innovator in the short-term insurance industry
affords the insurer with a sustainable growth model going forward.”
Despite strong premium growth and a
large dividend payment of R60m, the international solvency margin
remained comfortable at 47% in F06, whilst the statutory solvency
ratio amounted to 37%, comfortably exceeding the statutory minimum
level. Catastrophe reinsurance cover limits Auto & General’s net
retention to R5m per event, or a low 1% of capital, providing
further protection to the balance sheet. On the back of a net cash
inflow of R65m for F06, the insurer posted its third consecutive
increase in claims cash coverage, to 5.5 months.
According to Nigel England,
financial director of Auto & General
Insurance: “Our global credit rating has an enormous impact on the
Company as it provides an independent and internationally recognised
measurement of an organisation's financial strength. The process
also presents a useful management tool by providing management with
the benefit of a knowledgeable, independent, third party opinion on
the organisation and its operations. We are extremely pleased that
our rating has increased from an A+ to an AA-.”
Author:
Jolene Chait (The Mail
Room)
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