Agusto & Co has assigned an “A+” rating to Zenith General Insurance Company Limited.
That was the first time the pan-African rating agency would be rating the insurer.
According to a statement by Agusto & Co. yesterday, the rating assigned to Zenith General Insurance Company Limited was reflective of an insurer with good financial condition and strong capacity to meet its obligations as and when they fall due.
“Zenith General Insurance Company Limited’s financial condition is underpinned by good profitability jointly supported by its core insurance business and strong investment income. “This is in addition to good capitalisation, moderate exposure to risk and a good liquidity profile. Furthermore, an experienced management team drives the processes adopted by the Insurer in its 48th year of operations.
“The rating is however constrained by claims and operating expenses impacting operating cash flow, as well as overall adverse macroeconomic headwinds which continue to impact business activity in Nigeria, even as the country recovers from recession,” it stated.
The Nigerian insurance industry has grappled with rising claims typical of difficult economic periods.
This was alongside moderated premium generation as a result of subdued business activity.
As analysed in Agusto. & Co.’s 2018 insurance industry report released recently, profitability for insurers is a delicate balancing act between premium generation, astute pricing that is commensurate to risk carried, and strong investment management abilities yielding maximum returns whilst safeguarding policy holders and shareholders’ funds.
The industry’s growth potential also lies in the ability to innovatively harness retail opportunities (with life, health, motor, general accident and property/belongings insurance products).
Profitability indicators, underwriting profit margin and return on average equity for the industry as a whole, hovered around 16.8 per cent and 9.9 per cent respectively, for the 2017 financial year.
With 14 life insurers, 28 general insurers, 13 composite insurers, two dedicated takaful insurers, and two re-insurers operating in the Nigerian market, the ability to demonstrate sound financial condition is instrumental to acquiring and retaining business, as well as attracting investments.