Fitch Ratings has affirmed
The Outlook is Stable.
Tunis Re's National IFS is driven by its strong creditworthiness. The recent upgrade of
Key Rating Drivers
Leading Domestic Market Position: Tunis Re is
High Domestic Assets Risk: The company is highly exposed to systemic risk as most of its assets are domestic. The Fitch-calculated risky asset ratio was of 223% at end-2021. Most of Tunis Re's balance sheet is exposed to currency risk through its business operations that are increasingly skewed towards international markets, active use of international retrocession, and an unhedged currency mismatch between assets and liabilities.
Strong Profitability: Fitch believes Tunis Re's earnings are strong for the rating, supported by a sound technical profitability. Tunis Re reported a broadly stable 2022 net loss ratio (defined as the ratio of net loss expense to net earned premium) when compared with 2021 despite the impact of inflation and exchange rate effects due to the rise of the dollar. Its combined ratio reached 92.5% in 2021 and averaged 96.3% over 2021-2019. We expect Tunis Re's solid underwriting expertise, sound risk management and effective retrocession to be supportive of earnings.
RATING SENSITIVITIES
Factors that could, individually or collectively, lead to positive rating action/upgrade:
Material improvements in Tunis Re's business risk profile, which could result from an increasing share of good-quality business in higher rated countries than
Factors that could, individually or collectively, lead to negative rating action/downgrade:
Material deterioration in the company's business risk profile, which could result from increasing business presence in high-risk markets.
Evidence of significant deterioration in the company's retrocession policy and programme.
REFERENCES FOR SUBSTANTIALLY MATERIAL SOURCE CITED AS KEY DRIVER OF RATING
The principal sources of information used in the analysis are described in the Applicable Criteria.
RATING ACTIONS
Entity / Debt
Rating
Prior
Natl Ins Fin Str
AA(tun)
Affirmed
AA(tun)
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VIEW ADDITIONAL RATING DETAILS
Additional information is available on www.fitchratings.com
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