African cell-captive insurer Centriq has been awarded an A+ rating by the Global Credit Rating (GCR) Company for the sixth year in a row.
The company is also to relocate its offices to the Oval, Wanderers Office Park in Illovo, which they will operate from as of 28 July 2014.
GCR has stated that it considers Centriq to be strategically important to the Santam group, given its alignment with the group’s growth strategy.
Centriq is an established player in the cell captive segment, with a market share of approximately 19 percent.
The insurer has maintained capital levels above internal and statutory interim measures. Capitalisation levels are further supported by the high credit quality of reinsurance and investment counterparties, while the conservative investment composition supports adequate key liquidity metrics.
The underlying third party cells remain profitable relative to industry averages on a combined basis, although Centriq’s increasing exposure to underwriting risk at the promoter level has heightened earnings volatility. The insurer is exposed to credit risk stemming from the net liability position on certain cells.
Going forward, sustainable growth in profitable business lines, while maintaining sound capital at the cell, promoter and statutory levels could support an upward rating movement, according to GCR.
In contrast, a sustained weakening in operating performance, which leads to significant erosion of promoter solvency and/or a revision to the strategic holding of Centriq within its parent, the Santam group, could trigger a rating downgrade.
This could also result from regulatory changes that impact on profitability and scale.
