Santam assigned top ratings by S&P
Cape Town - Standard and Poor’s(S&P), the global ratings agency, announced that it has assigned its 'A-' long-term counterparty credit and insurer financial strength ratings and 'zaAA' South Africa national-scale rating to South Africa-based non-life insurer, Santam Ltd. “This rating is testament to the financial strength of Santam and its stable operating performance, further enhancing our reputation and leadership status in the local market,” says Ian Kirk, CEO of Santam.
S&P noted that the outlook for Santam is stable, reflecting the expectation that Santam will continue to develop its competitive position through diversification, produce a combined ratio between 92%-96% (in line with its long-term average of 94%) and manage risk exposures in line with capital resources to support the current "good" Santam .
The insurer’s strong competitive position is based on their dominant position and scale in the local market where it has a 23% share of gross premium written (GPW) in 2011. The company also has a broad and diverse product range, well-established brand, and strong client-servicing abilities.
According to the report, Santam's financial flexibility is viewed as strong reflecting its business’ strong ability to generate cash and its limited growth in prospective capital requirements. The report expects that any future capital requirement to be met from retained earnings.
S&P’s base-case scenario expects the company's competitive position to continue to develop as a result of diversification initiatives such as Santam Re and by earning performance-related fee income as the non-life technical partner for Sanlam's (unrated) foreign strategic investments. However, because the initiatives are relatively modest in size, their initial financial impact is expected to be limited. Expected premium growth is to be broadly in line with GDP plus consumer price index, with market share rising to 25% by 2014.
The rating will improve Santam Re’s ability to do business in the international insurance arena where S&P’s ratings are influential. Santam Re's strong service offering is now enhanced by S&P's recognition of the financial strength of the Group supporting this business.
“We will continue to grow Santam’s business, through diversification,” says Kirk. “While Santam is the leading short-term insurer in South Africa, it is critical in today’s competitive market to stay at the forefront on new developments with our industry and ensure that we continue to deliver insurance good and proper to our policyholders, shareholders and other stakeholders at all times.”