LONDON, 10 July 2013—A.M. Best Europe – Rating Services Limited has affirmed the financial strength rating of B+ (Good) and issuer credit rating of “bbb-” of Société Tunisienne de Réassurance (Tunis Re) (Tunisia). The outlook for both ratings remains stable.
The ratings of Tunis Re reflect its strong risk-adjusted capitalisation and excellent 2012 underwriting performance. An offsetting rating factor is Tunisia’s country risk, where the company’s business profile and investment portfolio remain concentrated.
After the 2011 political unrest, a moderate economic recovery continued in Tunisia during 2012. In February 2013, a political crisis arose in the country; a new government was formed on 13 March, but the issues that sparked the revolution in January 2011 have remained largely unresolved. In A.M. Best’s opinion, although Tunis Re’s business profile and investment portfolio remain concentrated in Tunisia, the company has promptly responded to last year’s events with new strategic actions that somehow mitigated A.M. Best’s concerns on the country risk of Tunisia.
A.M. Best believes the company’s risk-adjusted capitalisation, as measured by Best’s Capital Adequacy Ratio, is strong and expected to increase going forward, supported by good internal and external capital generation. Tunis Re’s capital position improved following the success of its capital increase in May 2012, which amounted to TND 60 million, equally distributed between nominal capital and premium issue.
In 2012, Tunis Re’s gross written premium (GWP) increased by 9.2%, above the market average of 8.1%, to TND 77 million (2011: TND 71 million), driven by the increase in its fire and aviation lines of business, which comprises an important proportion of its business portfolio. The company’s profitability reached a pre-unrest level in 2012, with a net result that increased to TND 6.2 million (2011: TND 2.7 million), supported by both a good technical result and strong investment performance.
Positive rating actions are unlikely at this time considering the current pressures on the country risk of Tunisia. Negative rating actions could occur if Tunis Re’s ratings fundamentals were to deteriorate significantly or if the country risk of Tunisia as assessed by A.M. Best were to deteriorate.
The methodology used in determining these ratings is Best’s Credit Rating Methodology, which provides a comprehensive explanation of A.M. Best’s rating process and contains the different rating criteria employed in the rating process. Best’s Credit Rating Methodology can be found at www.ambest.com/ratings/methodology.
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