Credit rating upgrade to spur growth; Interview

Credit rating upgrade to spur growth 

Emeritus got reinsurance credit rating to –A from BBB, 1. This comes a year after Zimre Holdings Limited (ZHL) consolidated its reinsurance operations under Emeritus Reinsurance International, as it sought to innovatively grow its market share and profitability. The rebranding, which started in other countries in the region, saw Baobab Reinsurance being transformed into Emeritus Reinsurance  with expectations to list on the Botswana Stock Exchange. Insurance 24 caught up with Emeritus Managing Director Leo Huvaya to understand how the company got an upgrade in rating and the implications to operations and stakeholders.

Below are the excerpts of the interview: 

I24: Can you explain to us how you achieved this?

LH: This was achieved through consistent profitability over the past 3 years, on the basis of stringent risk selection and underwriting discipline, cost control and prudent investment decisions.

I24: What does this rating mean to Emeritus RE? 

LH: It raises the bar in terms of overall service delivery to clients and demonstrates our ability to timeously discharge our obligations as and when they fall due as the claims paying ability is the marketing window for a successful reinsurer.

I24: How these ratings benefit you and your stakeholders?

LH: It is affirmation of our solid financial strength which provides us competitive advantage in the market place through enhanced confidence to clients. The rating upgrade will, thus, attract further business support for growth and profitability to the benefit of all stakeholders.

I24: Going forward what your comment on Emeritus RE’s service delivery hinged on this rating?

LH:  We naturally commit to providing exceptional service in all aspects and aim to continue meeting and exceeding our clients expectations in terms of service delivery and turnaround times not only for claims but for all business processes.

I24:  It’s been a while since you rebranded from Baobab? What can you see have been the milestones you have achieved so far?

LH: It is important to note that rebranding was done in 2018 and some of the achievements so far include 1. Mono-branding across the whole reinsurance arm of the group, brand rated the best brand for 2018, 2) Brand communication and amplification with high levels of brand acceptability across markets. 3) Growth in market share from below 8% to above 11%. 4)  Profitability improved from -19% to 3%.

I24: You once indicated that rebranding of Baobab Re to Emeritus Re was expected to ensure that the group strengthens its capital position to match top regional insurers and enjoy benefits from economies of scale and synergies. How far have you gone in attaining this?

LH: Brand consolidation through mono branding has ensured more business support to the group. In the pipeline is the capital raising initiative and transfer of the head office to Botswana.

I24: What other key initiatives do you still need to achieve on a global level?

LH: Further capital raising initiative thereby introducing shareholder diversification. Eying growth in the external markets that we are currently servicing and expanding into new markets.

I24: What’s your comment on the prevailing economic environment and how it has impacted on your operations and future ambitions?

LH:  Like any other industry, we have not been spared from the effects of the current operating environment, corporates and individuals are scaling down on their insurance requirements and naturally this also filters to us, the reinsurers. Current forex shortages amongst other
issues dents on our external market penetration plans.