Global Credit Ratings Company (GCR) has affirmed a claims paying ability rating of AA+ for credit insurer Coface South Africa with a stable outlook.
Coface South Africa is a wholly owned subsidiary of Compagnie Francaise d’Assurance pour le commerce Exterieur, the third largest insurer in the international market for receivables management and trade credit insurance.
The ultimate shareholder is Natixis, a leading French corporate and investment banking entity with a market capitalisation totalling €10,6-billion.
GCR says the credit rating is based on a number of key factors:
- Coface South Africa’s experience in the South African market for more than 20 years.
- The guarantee provided to Coface South Africa by Cofinpar, a 100%-owned group subsidiary, as well as a letter of continuing support from the ultimate parent company, which provides significant rating support.
- The high degree of reinsurance support from the Coface Group which provides Coface South Africa with access to business from key multinational clients, technical expertise and operational platforms.
- The underwriting criteria applied has ensured profitability on a gross and net basis over the review period, which is expected to continue going forward.
“The insurer’s investment portfolio remains highly conservative which underpins the sound liquidity levels,” says GCR.
GCR says that an upward movement on the rating or outlook could develop given demonstrated and meaningful market penetration over the long term, whilst maintaining current profitability and credit protection measures at similar levels.
National scale ratings history
Initial rating (Aug/2006)
Claims paying ability: AAA(SA)
Outlook: Stable
Last rating (Aug/2012)
Claims paying ability: AA+(SA)
Outlook: Stable
Applicable methodologies and related research
GCR’s Criteria for Rating Short Term Insurance and Reinsurance Companies
The ratings above were solicited by, or on behalf of, the rated client, and therefore, GCR has been compensated for the provision of the ratings.
Salient features of accorded ratings
GCR affirms that a.) no part of the rating was influenced by any other business activities of the credit rating agency; b.) the rating was based solely on the merits of the rated entity, security or financial instrument being rated; c.) such rating was an independent evaluation of the risks and merits of the rated entity, security or financial instrument; and d.) the validity of the rating is for a maximum of 12 months, or earlier as indicated by the applicable credit rating document.
Coface South Africa Insurance Company Limited participated in the rating process via face-to-face management meetings, teleconferences and other written correspondence. Furthermore, the quality of information received was considered adequate and has been independently verified where possible.
The credit rating/s has been disclosed to Coface South Africa Insurance Company Limited with no contestation of the rating.
The information received from Coface South Africa Insurance Company Limited and other reliable third parties to accord the credit rating included the 2012 audited annual financial statements (plus four years of comparative numbers), latest internal and/or external report to management, full year detailed budgeted financial statements, unaudited year to date management accounts, the current year reinsurance cover notes and stop loss treaty, implicit letter of comfort, explicit guarantee, buyer exposures and limits.