Standard & Poor's upgrades leading SA insurer's rating status

Adam Samie, CEO of Lion of Africa Insurance

In the space of less than six-months, leading South African short-term insurer, Lion of Africa Insurance, has been upgraded from an “A-“ to an “A” national scale rating by Standard and Poor’s (S&P) Rating Services.

This follows S&P’s publication of revised mapping guidelines for the South African national credit rating scale.

According to Adam Samie, CEO of Lion of Africa Insurance, the upgraded rating, which follows on the back of S&P’s downgrading of South Africa’s sovereign debt rating last week, is a positive shot in the arm for both the company and the country’s financial services sector.

“Our raised status is further evidence of our position as a Corporate Insurer in the South African market and we now have the highest rating of any South African short-term insurance company that is wholly run on black empowerment principles. Since our last rating, we have also continued to build on our successful empowerment track record,” says Samie.

In its commentary, S&P echoed this sentiment, saying the company’s high status as a verified Level 1 contributor differentiates it from the competition and indicates that it has a supportive shareholder with the same empowerment ethos.

Furthermore, the rating agency says that the stable outlook on the long-term ratings of the company reflects its opinion that Lion of Africa Insurance will continue to develop its competitive position in the South African market in both new and existing lines of business, as well as grow its presence in the wider African market.

In its outlook, S&P stated that the company’s operating performance is expected to remain strong and reflect stable loss performance within the existing range of 50% - 60% and a slight decline in operating expenses. The rating agency noted that this is likely to result in a net combined ratio of between 93% - 98%.

In its report S&P also highlighted Lion of Africa Insurance’s good investment and liquidity profiles and expects the company to maintain its capitalisation at least at a good level, with interest and coverage ratios maintained within current tolerances.

Samie says that improvement in key areas such as risk management, training and skills development, as well as the company’s evolving national footprint have also contributed to the revised rating. “From a diversity perspective, we not only achieved set transformation goals, but we were also recognised for delivering on our strategic plans in terms of increased product variety.

“In addition, our continued management team strength was cited as a significant factor in the awarding of our new rating status.”

He says that from a regulatory perspective, Lion of Africa Insurance was also recognised by S&P for the progress it had made in preparing for impending regulation in the form of the Solvency Assessment & Management (SAM) programme - which is based on Europe’s Solvency II model.

“The adoption to solvency regulations is not only critical for our company’s local and global competitiveness, but is also vital to the evolution of South Africa's insurance sector,” concludes Samie.