Morocco’s nationwide reinsurer maintains “good” rankings from AM Greatest

AM Greatest has affirmed the monetary power score of B++ (Good) and the long-term issuer credit standing of “bbb” (Good) for Société Centrale de Réassurance (SCR), based mostly in Morocco and the nation’s nationwide reinsurer.

These rankings are indicative of SCR’s strong steadiness sheet power, which AM Greatest categorizes as robust. Further components contributing to the rankings embrace SCR’s constant working efficiency, its impartial enterprise profile, and its efficient enterprise threat administration (ERM) practices.

A key element of SCR’s steadiness sheet power is its risk-adjusted capitalization, rated on the strongest degree by Greatest’s Capital Adequacy Ratio (BCAR). The corporate’s BCAR rating advantages from its conservative strategy to technical reserve margins.

Nonetheless, its risk-adjusted capitalization is reasonably impacted by excessive dividend distributions to its most important shareholder, Caisse de Dépôt et de Gestion (CDG), a state-owned funding entity in Morocco, which limits the retention of earnings, it was said. SCR additionally enjoys the backing of an express assure from the Moroccan state. The corporate’s asset focus in Morocco, with over 95% of belongings invested domestically, is an element within the evaluation of its steadiness sheet power, affecting the standard of its belongings.

Over the previous 5 years (2018-2022), SCR has constantly proven robust monetary outcomes, with a weighted common return on fairness of 12.0%. These earnings have been bolstered by sturdy funding returns, averaging 5.5% over the identical interval, and complemented by strong underwriting efficiency. SCR’s non-life mixed ratio, averaging 91.8% throughout this time, demonstrates the profitability of its Moroccan portfolio and advantages from favorable reserve growth from its legacy obligatory cessions enterprise.

Nonetheless, 2022 noticed a dip in underwriting efficiency, with a non-life mixed ratio of 101.2%. In 2023, SCR’s web publicity to earthquakes in Türkiye and Morocco was comparatively low, due to an efficient retrocession program. Trying forward, AM Greatest anticipates SCR’s underwriting and funding returns to proceed bolstering its robust operational efficiency.

Within the Moroccan market, SCR holds a strong place, underlined by its established function because the nationwide reinsurer. This dominant home place helps offset the corporate’s restricted world reinsurance market presence. In 2022, SCR reported a gross written premium of MA$3.4 billion (roughly US$334 million), with 74% originating from home enterprise. The corporate is actively increasing its worldwide footprint, supported by the opening of strategically positioned consultant places of work and forming new partnerships to entry further markets.

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