ACE South Africa awarded AA- credit rating by Global Credit Ratings (GCR)
18 October 2013
ACE
Insurance South Africa (ACE SA) has been upgraded to an AA- (ZA) credit rating by the Global Credit Rating (GCR) Company. The outlook for the rating is stable. This rating refers directly to the company’s national scales claim paying ability.
In making its ratings decision, GCR welcomed the financial support that ACE SA receives from its parent company as well as its clear relevance to the ACE Group’s global strategy, stating that:
"ACE SA’s rating derives significant upliftment from the support framework in place at Group level. In this regard, implied financial support is provided by AIH (rated AA-), by way of a letter of comfort (to meet obligations should ACE SA be unable to do so), while the demonstrated capital support by [AIIH] is positively viewed. The strategic benefit of ACE SA to the broader ACE Group is evidenced by the insurer’s strong gross profitability.”
GCR also highlighted the strong reinsurance support ACE SA receives, along with the benefits of the ACE Group’s investment policy:
"The level of reinsurance support provides ACE SA with significant capacity relative to the size of its balance sheet, while also displaying a strong level of integration of the insurer into the Group’s international structure. While the majority of cessions are placed within the group (increasing counterparty concentration risk), note is taken of the reinsurer’s strong credit rating and the letter of credit to meet reinsurance obligations. Capital support is further enhanced by the insurer’s conservative investment policy, which mitigates capital risk in the event of market volatility, while also translating into comfortable liquidity metrics.”
GCR noted that ACE SA’s stand-alone credit profile is dependent on the successful execution of its medium term growth strategy, coupled with the maintenance of the strong underwriting discipline that has supported its "healthy” record of growth and underwriting profitability.
John Nienaber, Country President, South Africa, at ACE Group said:
"We were awarded the AA- rating based on our ability to show that our business is operating under the strongest guidance and that we have adequate surety to increase market confidence. As a South African business run and operated on a global platform, we have ensured that our credit record remains strong and have provided a letter of credit to meet the reinsurance obligations. Our stand-alone credit profile also remains strong.
"We are fully committed to growing our business in South Africa and we are pleased that, in assigning us this improved rating, GCR has recognised our efforts to diversify our business, particularly in our crucial property line, as well as the medium term strategic growth expected to emanate from specialty classes such as energy, casualty and financial lines.”
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