AM Best


A.M. Best Affirms Credit Ratings of Société Tunisienne de Réassurance


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Charlotte Vigier
Senior Financial Analyst
+44 20 7397 0270
charlotte.vigier@ambest.com

Ghislain Le Cam, CFA, FRM
Director, Analytics
+44 20 7397 0268
ghislain.lecam@ambest.com

Christopher Sharkey
Manager, Public Relations
+1 908 439 2200, ext. 5159
christopher.sharkey@ambest.com

Jim Peavy
Director, Public Relations
+1 908 439 2200, ext. 5644
james.peavy@ambest.com

FOR IMMEDIATE RELEASE

LONDON - JULY 27, 2017 01:47 PM (EDT)
A.M. Best has affirmed the Financial Strength Rating of B+ (Good) and Long-Term Issuer Credit Rating of “bbb-” of Société Tunisienne de Réassurance (Tunis Re) (Tunisia). The outlook of these Credit Ratings (ratings) is stable.

The ratings reflect Tunis Re’s strong risk-adjusted capitalisation, good operating performance, and solid business position in its domestic market. The ratings also recognise Tunis Re’s exposure to the macroeconomic and political conditions in Tunisia, its core market.

Tunis Re’s risk-adjusted capitalisation has increased to a strong level over the past five years, bolstered by two capital injections, as well as retained earnings, which have increased the capital base from TND 68.6 million at year-end 2011 to TND 191.3 million at year-end 2016, whilst underwriting risks have only increased moderately over the same period. A.M. Best expects prospective risk-adjusted capitalisation to remain strong, with a capital base sufficient to absorb Tunis Re’s strategic initiatives. However, earnings retention may be constrained by an onerous dividend policy, which is based on a percentage of paid-up share capital.

Tunis Re has a track record of good operating performance, with pre-tax profits ranging between TND 7.0 million and TND 21.5 million over the past five years. Whilst operating profitability has been driven by investment returns, technical performance has improved in the past two years. In 2015 and 2016, the company achieved technical profits of TND 4.7 million and TND 4.6 million respectively, translating into a sound combined ratio of approximately 91% in each year. The improvement in technical performance was supported by lower levels of claims across all lines of business, reflecting the company’s improved underwriting discipline.

Tunis Re has a solid business profile as the leading domestic reinsurer in Tunisia, with an estimated market share of gross premium in excess of 20%. Whilst there are no compulsory reinsurance cessions in Tunisia, local insurers cede 15% to 20% of their premium revenue to Tunis Re, based on a longstanding gentlemen’s agreement. In 2016, gross written premium (GWP) increased by 12.8% to TND 113.4 million, with growth in the fire, engineering, and life classes offsetting reduced volumes in the aviation portfolio.

Whilst Tunis Re has reduced its reliance on its domestic market in recent years by successfully targeting growth in neighbouring countries, the company remains exposed to the economic and political challenges prevailing in Tunisia. Although the company continues to gradually increase its geographical diversification, Tunisian business accounted for approximately 56% of GWP in 2016, and the majority of the company’s assets remain invested domestically.

This press release relates to Credit Ratings that have been published on A.M. Best’s website. For all rating information relating to the release and pertinent disclosures, including details of the office responsible for issuing each of the individual ratings referenced in this release, please see A.M. Best’s Recent Rating Activity web page. For additional information regarding the use and limitations of Credit Rating opinions, please view Understanding Best’s Credit Ratings. For information on the proper media use of Best’s Credit Ratings and A.M. Best press releases, please view Guide for Media - Proper Use of Best’s Credit Ratings and A.M. Best Rating Action Press Releases.

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AMB# Company Name
083349 Société Tunisienne de Réassurance