Ratings agency Standard & Poor's has awarded the African Trade Insurance Agency (ATI) a long-term rating of 'A', with a stable outlook.
The long-term "A "counterparty and insurer financial strength rating has been granted to Kenya-based company, and is said to reflect the company’s strong capitalisation, strong investments and high level of liquidity.
ATI has a strong current capital adequacy, with total capital at the end of 2007 equivalent to over 90% of gross underwriting exposure.
The bank has also placed investments in highly-rated banking institutions, with funds mainly in US dollars.
Its level of liquidity remains strong, with available current funds in excess of gross exposure.
Both capitalisation and liquidity levels are expected to decrease as the company expands, but S&P judge that both factors will continue to support the rating.
Limitations to the rating include the underdeveloped nature of the target insurance markets in the African region. According to a statement from S&P: "We do not generally consider the member countries of ATI able to sustain sovereign ratings better than weak to marginal, and this affects ATI’s potential financial flexibility and ability to recover qualifying losses from member states.”
However, despite viewing the potential for economic instability in Africa as “significant”, it believes this risk to be partly offset by ATI’s preferred creditor status with its member countries, and the implicit backing of the World Bank’s International Development Association.
The "stable "outlook has been granted to reflect S&P’s view that ATI will maintain strong capitalisation of no less than 42% of net exposure. It also does not expect reinsurance utilisation to exceed 60% of the company’s total gross exposure.
ATI’s main mandate is to provide insurance, including coinsurance and reinsurance, guarantees and other financial instruments used to promote trade and investment in Africa, in addition to, or in cooperation with, those facilities offered by the private sector.
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