Tunis Re’s GWP increased by 12.8% to TND113.4 million (US$46.7 million) in 2016, with growth in the fire, engineering, and life classes offsetting reduced volumes in the aviation portfolio.
The reinsurer has a track record of good operating performance, with pre-tax profits ranging between TND7.0 million and TND21.5 million over the past five years, said A.M. Best in a report.
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 TND4.7 million and TND4.6 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, said the report.
Tunis Re has a solid business profile 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.
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.
The report also noted that 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 TND68.6 million at year-end 2011 to TND191.3 million at year-end 2016, whilst underwriting risks have only increased moderately over the same period.
In the report, A.M. Best affirms the Financial Strength Rating of B+ (Good) and Long-Term Issuer Credit Rating of “bbb-” of Tunis Re. The outlook of these Credit Ratings (ratings) is stable. M
TND1 = US$0.41