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FOR IMMEDIATE RELEASE
LONDON - DECEMBER 19, 2014 09:06 AM (EST)
A.M. Best has affirmed the financial strength rating of B+ (Good) and the issuer credit rating of "bbb-" of Kenya Reinsurance Corporation Limited (Kenya Re) (Kenya). The outlook for both ratings is stable.
The ratings of Kenya Re reflect its solid risk-adjusted capitalization, stable operating performance and strong competitive position within its regional reinsurance market and in Kenya, in particular. The ratings also consider Kenya Re's exposure to Kenya's economic challenges.
Although risk-adjusted capitalization deteriorated in 2013, it remains supportive of the company's current business profile and projected business plans. The introduction of a new catastrophe modeling approach increased Kenya Re's capital requirements. This was partially offset by strong retained earnings and by the enhanced credit quality of its retrocession programme.
Kenya Re's earnings are expected to improve marginally at year-end 2014, compared to the prior year, in line with its recent positive trend and consistent with half year 2014 reporting. Results are projected to be supported by better non-life technical results, resilient profitability in its life portfolio and stable investment returns. Expense ratios remain at good levels when compared to historical standards and the bottom-line effect of write-offs reinsurance receivables have diminished during 2013 and 2014.The company's competitive position remains strong, particularly in Kenya, where it enjoys compulsory cessions.
Negative rating actions could occur if operating performance deteriorates or if risk-adjusted capitalisation is not maintained at a strong level. Positive rating actions are unlikely in the near term.
The methodology used in determining these ratings is Best's Credit Rating Methodology, which provides a comprehensive explanation of A.M. Best's rating process and contains the different rating criteria employed in the rating process. Best's Credit Rating Methodology can be found at www.ambest.com/ratings/methodology.
Key insurance criteria reports utilised:
In accordance with Regulation (EC) No. 1060/2009, the following is a link to required disclosures: A.M. Best Europe - Rating Services Limited Supplementary Disclosure.
This press release relates to rating(s) that have been published on A.M. Best's website. For all rating information relating to the release and pertinent disclosures, including details of the office responsible for issuing each of the individual ratings referenced in this release, please visit A.M. Best's Ratings & Criteria Center .
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