Emeritus Reinsurance Zambia Limited

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Emeritus Reinsurance Zambia Limited (2022-02)
  • Emeritus Reinsurance Zambia Limited
  • Year : Feb 2022
3 Tokens
USD 300.00

Following elevated credit impairments in FY19, the reinsurer curtailed growth in receivables resulting in a moderated earnings impact. This caused a recovery in the underwriting result to ZMK7.1m in 11M F21 (FY20: ZMK0.7m profit; FY19: ZMK10.7m loss). Essentially, credit impairments reduced to 18% of gross premiums (FY19: 24%) and were further supported by stringent cost containment strategies to reduce the operating expense ratio to 48.5% (FY19: 73.3%). We, however, note the low net incurred loss ratio of around 20% in both periods (supported by reserve releases) as atypical.

Additional Information

The Evolving Outlook captures the variability of the credit profile over the short term due to strong earnings trends that have been sustained to 11M F21 but could taper off as the claims experience normalises. A sustained improvement in earnings and liquidity could result in an upgrade, provided solvency metrics increase to an acceptable range. A sustained positive earnings trend, embedding liquidity coverage of at least 1.5x, coupled by a GCR CAR of above 1x could support an upgrade of the national scale rating.

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