AM Finest affirms Tunis Re rankings – however with a damaging outlook

World credit standing company AM Finest has affirmed the credit score rankings of Société Tunisienne de Réassurance (Tunis Re), which had a Monetary Power Score (FSR) of B and a Lengthy-Time period Issuer Credit score Score (Lengthy-Time period ICR) of “bb” – however with a damaging outlook.

AM Finest got here to the conclusion that Tunis Re’s stability sheet energy was robust and that its working efficiency was enough, its enterprise profile was restricted, and its enterprise threat administration (ERM) was marginal.

The damaging outlook for Tunis Re’s rankings is a mirrored image of the present threat pressures seen in Tunisia. In accordance with the credit standing company, such pressures might proceed to deteriorate the agency’s stability sheet fundamentals together with its potential to handle the heightened threat atmosphere wherein it’s working.

Measured by its Finest’s Capital Adequacy Ratio (BCAR), AM Finest discovered that Tunis Re’s stability sheet energy was underpinned by its risk-adjusted capitalisation. The evaluation took under consideration the agency’s funding portfolio by its asset class and focus in Tunisia. With Tunisia’s heightened financial and political threat driving will increase within the required capital for funding threat since 2020, the margin that Tunis Re held in extra was considerably diminished.

From 2019 till 2023, Tunis Re had a mean return-on-equity ratio at 7.6%. It earnings largely got here from strong funding returns. Inside the similar interval, the agency additionally had a weighted common internet funding yield of seven.7%.

Tunis Re’s non-life portfolio noticed a technical revenue for 5 consecutive years by 2023, noting an enchancment in its underwriting efficiency since 2018. Regardless of this, features and losses in international trade offered a stage of volatility to the agency’s working efficiency.

The agency’s enterprise profile evaluation served as a mirrored image of its place in Tunisia in addition to its diversification into regional markets. Its operations proceed to be of restricted scale within the international reinsurance market, it was famous.

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