Moody's Ratings (Moody's) yesterday upgraded ASR Re's insurance financial strength rating (IFSR) to 'A3' from 'Baa1'. The outlook has been changed to 'Stable' from 'Positive.'
ASR Re, a Bermuda-domiciled reinsurer, is owned by ASR Holdings (Mauritius), the holding company for Africa Specialty Risks (ASR), an insurance group that provides bespoke risk mitigation solutions across Africa and the Middle East.
Rationale
Moody’s said in a commentary, “The upgrade of ASR Re's IFSR to ‘A3’ reflects the strengthening of its capital adequacy following the agreed investment by Vitruvian Partners, ASR's new lead investor, which enhances the company's capacity to support continued growth while maintaining a strong financial profile and disciplined risk management framework.
“The upgrade also reflects ASR Re's growing relevance and market position in Africa's corporate and specialty insurance market, alongside improved business and geographic diversification as it expands into new developing markets, and the broad pool of high-quality partners supporting its binder panel, including ASR's own Lloyd's syndicate. The rating is further supported by consistently strong underwriting profitability, good asset quality, strong capital adequacy, and good financial and operating flexibility.”
These strengths are partially offset by execution risk inherent in maintaining strong underwriting discipline and profitability while growing its franchise and expanding into new markets, some of which have higher risk operating environments.
While ASR Re places meaningful capacity into its target markets, its own balance sheet remains modest relative to reinsurance peers, increasing its reliance on the binder partners and reinsurers it has in place to manage down its gross exposures, and necessitating continued exacting discipline around limit and exposure management.
Moody’s also said, “The stable outlook reflects our expectation that ASR Re will maintain strong underwriting performance, strong capitalisation and good asset quality while continuing to expand its franchise and geographic footprint in a disciplined manner.”
ASR’s response
Commenting on the upgrade, Mr Mikir Shah, ASR CEO, said, “This upgrade recognises the strength of our underwriting, our growing relevance in developing markets, and the strong capital foundation supporting the next stage of our expansion.
“As we broaden our reach across new developing markets, our focus remains on disciplined underwriting and responsible capital management. This is strengthened by our new lead investor, Vitruvian Partners, who will support our strategy to fulfil unmet insurance needs in developing markets.”