LONDON--(BUSINESS WIRE)--AM Best has assigned a Financial Strength Rating of A- (Excellent) and a Long-Term Issuer Credit Rating of “a-” (Excellent) to SanlamAllianz Re Ltd (SAZ Re) (Mauritius). The outlook assigned to these Credit Ratings (ratings) is stable.
The ratings reflect SAZ Re’s balance sheet strength, which AM Best assesses as strong, as well as its strong operating performance, neutral business profile and appropriate enterprise risk management. The ratings also reflect, in the form of lift, SAZ Re’s strategic importance to its ultimate co-shareholders, Sanlam Limited (South Africa) and Allianz SE (Germany).
SAZ Re’s balance sheet strength is underpinned by its risk-adjusted capitalisation at the strongest level, as measured by Best’s Capital Adequacy Ratio (BCAR). BCAR scores are expected to remain at the strongest level as the company executes its growth plan, underpinned by organic capital generation. Despite SAZ Re’s conservative investment portfolio by asset class, the quality of SAZ Re’s assets is considered to be an offsetting factor to the balance sheet strength assessment given the generally weaker credit quality of institutions in many of SAZ Re’s key markets. A further offsetting factor is the moderate levels of debtor balances on SAZ Re’s balance sheet, although this risk is mitigated partially by the fact that they are principally due from affiliated entities.
SAZ Re has a track record of strong operating performance as demonstrated by a return on equity that has exceeded 18% in four of the past five years (2019-2023). Robust operating results are underpinned by solid underwriting margins, with net combined ratios consistently below 83% in all of the past five years, benefiting from the company’s low operating expenses.
SAZ Re plays a strategic role within the Sanlam Allianz Joint Venture group of companies as its primary vehicle to manage catastrophe risk over all territories and retention aligned to the group’s appetite. Although SAZ Re is a small reinsurer by global standards, it operates a geographically diverse book of business across Africa, reflecting the international scope of the Sanlam Allianz Joint Venture.
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