Press Release - DECEMBER 14, 2016
A.M. Best Upgrades Credit Ratings of ZEP-RE (PTA Reinsurance Company)
FOR IMMEDIATE RELEASE
OLDWICK - DECEMBER 14, 2016
The rating upgrades reflect ZEP’s excellent risk-adjusted capitalisation, resilient underwriting profitability and improving regional competitive position. Further positive rating drivers include developments in the company’s enterprise risk management capability and financial flexibility provided by supportive shareholders. Partially offsetting rating factors include the ongoing challenges related to current reinsurance market conditions and the entity’s exposure to Kenya’s volatile business environment.
During the first nine months of 2016, ZEP has maintained its excellent risk-adjusted capitalisation level whilst premiums have grown. Profitability has been good with a loss ratio of approximately 55% and net income before tax ahead of 2015. Going forward, A.M. Best expects the company to continue to grow its franchise whilst maintaining its strict underwriting guidelines and moderate appetite toward new risks in new territories. Risk-adjusted capitalisation is expected to remain strong in the medium term.
ZEP continues to enhance its presence within its key regional markets but remains exposed to uncertainties surrounding the business environment in Kenya and other local territories, which increase the risk of earnings volatility. Despite the company maintaining profitability levels in a challenging market, increasing competition may add negative pressure to ZEP’s earnings over the longer term. However, in A.M. Best’s view, ZEP’s risk management framework serves as an effective tool to help mitigate these risks.
This press release relates to Credit Ratings 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 see A.M. Best’s Recent Rating Activity web page. For additional information regarding the use and limitations of Credit Rating opinions, please view Understanding Best’s Credit Ratings.
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