Société Centrale de Réassurance shown to be in a good position by S&P
Standard & Poor's Ratings Services has affirmed its 'BBB' long-term counterparty credit and insurer financial strength ratings on Morocco-based reinsurer Société Centrale de Réassurance (SCR).
The outlook is positive, reflecting the positive outlook on the Kingdom of Morocco (foreign currency BB+/Positive/B, local currency BBB/Positive/A-3).
"The ratings reflect SCR's public-policy institution status, based on 94% ownership by the state financial institution Caisse de Dépôt et de Gestion, and an unconditional governmental guarantee protecting SCR's balance sheet," said Standard & Poor's credit analyst Julien Parasie.
A historical dividend policy consisting in paying most of net earnings to its parent, and substantial investments (86% of bonds) in Moroccan government bonds underpin this status.
The ratings also reflect SCR's good competitive position and good operating performance. These factors are partially offset by execution risks associated with the implementation of its strategy, investment concentration risk, and high dividend policy.
SCR is the top reinsurer in Morocco, with a more than 70% market share and Moroccan dirham (MAD) 1.75bn (£108m) in gross premiums written at year-end 2006.
The company assumes 10% of the total local market on a quota share basis through "legal cessions" where it has no competitor; and writes conventional reinsurance, which is subject to full competition.
"As Standard & Poor's views SCR as a public-policy institution, the ratings and outlook on the reinsurer are aligned with those on Morocco," said Parasie. "As a result, if the local currency sovereign ratings on Morocco change, we would take a similar action on the ratings on SCR."
