AM Best Information Services

OCTOBER 14, 2021 09:36 AM (EDT)

AM Best Affirms Credit Ratings of ZEP-RE (PTA Reinsurance Company)

 Ben Diaz-Clegg
Financial Analyst
+44 20 7397 0293

Timothy Prince
Director, Analytics
+44 20 7397 0320

Christopher Sharkey
Manager, Public Relations
+1 908 439 2200, ext. 5159

Jim Peavy
Director, Communications
+1 908 439 2200, ext. 5644


LONDON - OCTOBER 14, 2021 09:36 AM (EDT)
AM Best has affirmed the Financial Strength Rating of B++ (Good) and the Long-Term Issuer Credit Rating of “bbb” (Good) of ZEP-RE (PTA Reinsurance Company) (ZEP-RE) (Kenya). The outlook of these Credit Ratings (ratings) is stable.

The ratings reflect ZEP-RE’s balance sheet strength, which AM Best assesses as very strong, as well as its strong operating performance, neutral business profile and marginal enterprise risk management.

ZEP-RE’s balance sheet strength assessment is underpinned by its risk-adjusted capitalisation at the strongest level, as measured by Best’s Capital Adequacy Ratio (BCAR). The company’s risk-adjusted capitalisation benefits from a relatively prudent asset allocation and low underwriting leverage. The ratings consider the company’s significant exposure to the high economic, political and financial system risks associated with Kenya and the company’s other important operating markets.

ZEP-RE has a track record of strong operating performance over the longer term, despite challenging market conditions, evidenced by its 10-year (2011-2020) weighted average return on equity (ROE) of 10.6%. AM Best notes that ROE should be viewed in the context of ZEP-RE’s reporting currency, the U.S. dollar, which somewhat limits the impact of the high local inflation on the company’s reported net income. The company’s underwriting performance has deteriorated in recent years, translating in a three-year (2018-2020) weighted average combined ratio of 100.7% (compared with a 10-year weighted average of 95.6%). As a result, management took a number of corrective actions to improve technical profitability, which should support strong operating performance over the underwriting cycle.

ZEP-RE operates as a composite reinsurer across Africa, with a focus on East African markets. The company’s competitive position benefits from mandatory cessions in a number of sub-Saharan African states.

This press release relates to Credit Ratings that have been published on AM 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 AM Best’s Recent Rating Activity web page. For additional information regarding the use and limitations of Credit Rating opinions, please view Guide to Best’s Credit Ratings. For information on the proper use of Best’s Credit Ratings, Best’s Preliminary Credit Assessments and AM Best press releases, please view Guide to Proper Use of Best’s Ratings & Assessments.

AM Best is a global credit rating agency, news publisher and data analytics provider specialising in the insurance industry. Headquartered in the United States, the company does business in over 100 countries with regional offices in London, Amsterdam, Dubai, Hong Kong, Singapore and Mexico City.

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AMB# Company Name
078388 ZEP-RE (PTA Reinsurance Company)