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Risk adjusted capitalisation strengthened in FY21, supported by well contained exposures to insurance and market risks, coupled with sound internal capital generation and improved premium and receivables collection. As such, the GCR capital adequacy ratio (“GCR CAR”) increased to 2.6x at FY21 (FY20: 2.3x). Risk adjusted capitalisation is expected to be maintained within a strong range, albeit there is likely to be a moderation in the metric below the 2.0x level if strong premium growth targets are achieved and / or if dividend payments are made.
The Stable Outlook reflects GCR’s expectation that risk adjusted capitalisation and liquidity will be maintained within strong ranges, which will mitigate potential earnings weakness. Positive rating action is unlikely in the short term but may stem from a sustained enhancement in underwriting performance resulting in strong growth in overall earnings over the medium to long term. This will help to consolidate liquidity and capitalisation strength.