(The following statement was released by the rating agency)
JOHANNESBURG/LONDON, August 04 (Fitch) Fitch Ratings has
Insurance Company Limited's (SIL) a National Insurer Financial
rating of 'AA(zaf)'. The Outlook is Stable.
SIL is the non-life bancassurance operating subsidiary of
Standard Bank Group
Limited (Standard Bank; National Long-Term Rating
KEY RATING DRIVERS
SIL's rating is aligned with that of Standard Bank as Fitch
Standard Bank would provide support to its subsidiary if needed,
high level of integration within the bank, its shared branding,
the group's strategy and its profitability.
SIL's credit strengths are its strong capitalisation,
strategy, and consistent profitability. Its small size and lack
diversification are credit weaknesses.
SIL's capitalisation, based on Fitch's risk-adjusted assessment
company's regulatory solvency position, is strong relative to
its peer group. At
FYE13 SIL's capital adequacy requirement (CAR) cover on a
solvency assessment &
management (SAM) interim measures basis was 2.1x, ahead of its
SIL's conservative investment strategy comprises maintaining a
high level of
liquidity, with 82.4% of investments invested in cash and
Overall profitability is sound, as indicated by SIL's strong
margin of 22.3% (2012: 23.5%) and return on equity of 30.5%
(36.9%). This was
despite a 5.6% decline in net profit in 2013 to ZAR322m, driven
mainly by an
increase in weather-related claims.
SIL is a small player in the South African insurance market with
a market share
by gross written premium (GWP) of less than 2%. Its business mix
concentrated, with homeowners' building insurance accounting for
71% of GWP.
Any change of Standard Bank's ratings is likely to lead to a
change in SIL's rating.
A downgrade could be triggered by deterioration in SIL's
profile to such an extent that Standard Bank might no longer, in
be likely to provide support to SIL if needed. This could result
sustained poor operating performance, severe weakening in SIL's
market share or
a significant weakening in its capital position.
+27 11 290 9402
Fitch Southern Africa (Pty) Ltd
23 Impala Road
+44 20 3530 1257
+44 20 3530 1250
Media Relations: Elaine Bailey, London, Tel: +44 203 530 1153,
Additional information is available on www.fitchratings.com
(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.
Applicable criteria, Insurance Rating Methodology, dated 13
November 2013, are
available at www.fitchratings.com.
Applicable Criteria and Related Research:
Insurance Rating Methodology
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