Ethiopian Reinsurance Share Company (2022-02)
- Ethiopian Reinsurance Share Company
- Year : Feb 2022
Summary
The financial profile is characterised by very strong capitalisation, strong liquidity, and sound earnings. The reinsurer notably benefits from legal cessions in Ethiopia, anchoring a strong local competitive position, despite limited presence in other target markets. Risk adjusted capitalisation is viewed to be very strong, underpinned by a large capital base catering for a low level of aggregate risk exposures. The reinsurer’s capital amounted to ETB1.2bn at FY21, resulting in a GCR Capital Adequacy Ratio (“CAR”) of 5.6x. Management expects the capital base to continue growing, supported by capital injections and profit retention.
Additional Information
The Stable Outlook reflects the expectation that current strength in the financial profile will be maintained, with the GCR CAR expected to be sustained well above 2.5x while the liquidity ratio could be maintained above 2.0x. Furthermore, no material changes are expected in the business profile. Upward rating movement may follow a sustained improvement in the business profile following significant geographic diversification of at least 10% contribution per country outside Ethiopia. An improvement in sophistication of capital management may also result in positive rating action.
