Best Assigns Kenya Re ‘B+’ Financial Strength Rating

September 29, 2004

A.M. Best Co. announced that it has assigned a financial strength rating of “B+” (Very Good) and an issuer credit rating of “bbb-” to Kenya Reinsurance Corporation Limited (Kenya Re). The outlook for both ratings is stable.

“Kenya Re’s capitalisation is regarded as strong and supportive of the company’s international growth strategy,” said Best. “However, risk-adjusted capital is significantly exposed to non-performing real estate assets, which constituted 16.8 percent of total investments in 2003.

“Operating performance is expected to remain at a very good level, reflected by a combined ratio of approximately 90 percent in 2004 and 2005, as new legislation stems the rising loss cost inflation in motor business.”

Best said it “views international diversification as integral to the company’s improving business position due to the expected withdrawal of the 18 percent domestic legal cession at the end of 2006, the restricted level of foreign investment and limited new business growth opportunities within Kenya.

“Premium income is expected to increase by nearly 10 percent through 2005 due to the company’s strong growth in regional markets of approximately 35 percent in 2004, prospectively slowing to 10 percent,” the bulletin concluded.

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