The enterprise risk management (ERM) framework of national reinsurer Societe Tunisienne De Reassurance (Tunis Re) showed continuous improvement in the past two years compared to local practices, which is positive for its rating, according to Fitch Ratings in a report released last week.
This was reflected in the first-time review of its reserving practices in 2019 by an independent actuarial firm, as well as by the review of its risk-based internal capital model by a leading international audit firm in 2020, says the global credit rating agency.
Tunis Re is the Tunisian reinsurance market leader, holding an estimated 20% market share in 2020, with very strong domestic market expertise and pricing power, notes Fitch.
The company writes 54% of its business abroad, and is expanding internationally. Although Fitch Ratings generally views diversification as positive for the credit profile, Fitch believes Tunis Re has limited potential for expansion into good-quality international business.
Continued resilience
Fitch believes Tunis Re’s credit fundamentals will remain more robust than Tunisian peers amid the coronavirus pandemic.
Last June, Fitch upgraded Tunis Re's National Insurer Financial Strength (National IFS) Rating to 'AA(tun)' from 'AA-(tun)', with the outlook stable.
The upgrade of Tunis Re reflected continued improvements in the reinsurer's ERM framework compared with local market practices. It also takes into account the company's robust credit fundamentals relative to Tunisian peers' amid the COVID-19 pandemic, with a very strong business profile locally, strong profitability and moderate asset risk.
The National IFS Rating reflects the leading position of Tunis Re in the Tunisian reinsurance market, as well as its strategic role within the Tunisian economy, underpinned by its strong ties with its cedants, retrocessionaires and the Tunisian State.