Global Credit Rating Limited (GCR) has confirmed ‘A’ financial rating of Sovereign Trust Insurance Plc from ‘A-‘ previous rating.
The rating affirms the company’s high claims payment posture among other requisite considerations for the new financial rating.
The rationale for the current rating carried out in 2021 from ‘A-‘ to ‘A’ status, according to GCR is based on the company’s renewed financial position and stable outlook from a statutory solvency perspective in the last three years.
It will be recalled that the underwriting firm in 2019 increased its shareholders’ funds from N4.1bn to N5.6bn through the rights issue that was carried out in that year to accomplish two objectives, attain its capitalization agenda and occupy a leadership position in the insurance sector in Nigeria.
The rating agency endorsed the company’s remarkably improved solvency margin, which it stated complies with the proposed regulatory capital requirement for the industry. The report further stated that, “despite the effects of the covid-19 pandemic on businesses and the fallout of the nationwide protest in FY20, the impact on underwriting performance was well absorbed by an improvement in the insurer’s scale efficiencies, with operating expense ratio registered at 37.0% in FY20 against the 53.19% that was recorded in FY19.” Also, investment income maintained an upward trajectory over the review period, thereby supporting return on revenue at 10.5% in FY20 as against 8.5% recorded in FY19. GCR expects STI’s liquidity metrics to remain sound on the back of conservative asset allocation and the planned additional capital injection.
According to the Rating Agency, Sovereign Trust Insurance Plc has a strong direct business generation capacity, which has over time stimulated retail segment penetration. The premium mix is considered well diversified and can still be improved upon in the years ahead.
The company aims at becoming one of the top five in the insurance sector within the shortest possible time. To achieve this, conscious effort is being made to open new channels of distribution to afford Nigerians qualitative insurance products and services through borderless technology that will serve as an enduring game-changer in the insurance market space both at home and abroad.
Sovereign Trust Insurance Plc is committed to attracting and retaining the best hands in the insurance business in Nigeria with a rare combination of proven professionals from diverse areas of discipline.