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FOR IMMEDIATE RELEASE
LONDON - JULY 10, 2014 02:25 PM (EDT)
A.M. Best has affirmed the financial strength rating of B+ (Good) and the issuer credit rating of "bbb-" of Compagnie Centrale de Réassurance (CCR) (Algeria). The outlook for both ratings remains stable.
The ratings reflect CCR's good domestic business profile, strong risk-adjusted capitalisation and consistently solid underwriting performance. An offsetting rating factor is the company's concentration of risks within Algeria.
CCR has a good domestic business position as Algeria's national reinsurer. CCR's leading position has been strengthened following the September 2010 regulatory mandate that increased the rate of compulsory cession to 50%.
Since the regulatory change, coupled with the expansion of its international business, CCR's gross written premium (GWP) has more than doubled. In 2013, CCR reported GWP of DZD 20.3 billion (USD 261.4 million).
CCR recorded an excellent technical result of DZD 2.5 billion (USD 32.2 million) in 2013, translating into a combined ratio of 76%. The company consistently produces solid technical profits, with a five-year average combined ratio of 77%. Operating performance was further supported by a solid investment income of DZD 993.2 million (USD 12.8 million) that contributed to CCR's record profit-after-tax of DZD 2.7 billion (USD 34.7 million) in 2013.
CCR's risk-adjusted capitalisation remains strong despite the significant increase in net premium written over the last three years. Going forward, A.M. Best expects the company's capital level to remain supportive of the current ratings despite an expected reduction in earnings retention, with a dividend pay-out ratio expected to increase from 25% to approximately 35%. Upward movement in CCR's ratings could occur if there are sufficient improvements in Algeria's socio-political and economic environments or the company demonstrates a controlled and profitable international diversification.
Downward pressure in CCR's ratings could occur if international expansion is unsuccessful or the political and economic conditions in Algeria 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 .
In accordance with Regulation (EC) No. 1060/2009, the following is a link to required disclosures: A.M. Best Europe - Rating Services Limited Supplementary Disclosure .
This rating announcement has been issued by A.M. Best Europe - Rating Services Limited, which is a subsidiary of A.M. Best Company. A.M. Best Company is the world's oldest and most authoritative insurance rating and information source.