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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 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, good underwriting performance and solid business position in its domestic market. The ratings also recognise Tunis Re's exposure to the macro-economic and political risks in Tunisia, its core market.
Tunis Re's risk-adjusted capitalisation remains strong and is expected to strengthen, supported by good earnings retention and external capital generation. After a successful capital increase in May 2012, which boosted Tunis Re's capital and surplus to TND 131.5 million at year-end 2012, the company intends to raise an additional TND 25 million by 2016.
In 2013, Tunis Re's gross written premium (GWP) increased by 11% to TND 85.9 million, which strengthened its leading position in the Tunisian reinsurance market, with an estimated market share of approximately 20%. The company reported a record net income of TND 7.7 million in 2013, chiefly driven by solid investment income, with technical performance remaining modest, producing a combined ratio of 98%.
Tunis Re's management has successfully navigated the company through a turbulent period within its domestic market. Despite gradual improvement in its geographical diversification, 64% of the company's GWP was generated in Tunisia in 2013. Additionally, the majority of its investment portfolio is restricted to the domestic market.
Positive rating actions are unlikely at present.
Negative rating actions could occur if Tunis Re's financial performance or risk-adjusted capitalisation were to materially deteriorate. Additionally, the company's ratings could be negatively affected by heightened economic and political risks in Tunisia.
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.