JCR Eurasia Rating has reviewed the financials of “Creditwest Insurance Ltd.” and affirmed the investment grade category credit rating of ‘A+ (Trk)’ on the Long Term National Scale along with a ‘Positive’ outlook in the annual periodic review. JCR Eurasia Rating has also affirmed the Long Term International Foreign Currency and Local Currency ratings as ‘BBB-’. Other notes and details of the ratings are given in the table below:
|Long Term International Foreign Currency
|BBB- / (Stable Outlook)
|Long Term International Local Currency
|BBB- / (Stable Outlook)
|Long Term National Local Rating
|A+ (Trk) /(Stable Outlook)
|Short Term International Foreign Currency
|A-3 / (Stable Outlook)
|Short Term International Local Currency
|A-3 / (Stable Outlook)
|Short Term National Local Rating
|A-1 (Trk) / (Stable Outlook)
Creditwest Insurance Ltd., which is owned by one of the fast growing conglomerates of Turkey, Altınbaş Group, is one of the companies dominating the non-life insurance sector of the Turkish Republic of Northern Cyprus (TRNC). The Company operates in a sector marked by the attempt to increase the control and efficiency of sector activities through complementary regulations and the shortages in consolidated sector data processing and carries out its activities through its head office and agency network consisting of twenty-four units, fourteen of which are branches of Creditwest Bank, another Group company and the main shareholder of the Company.
The asset based market share of the Company, enjoying the benefits of being a bank-affiliated Company with respect to its market recognition, access to the client network together with customer base, liquidity and funding costs, was suppressed through the has been supported through the dividend payment realized in the completed fiscal year. However, the equity level has been supported through internal sources comprising generated profits while the pressure on the liquidity ratios remained limited and they maintained their standings over the levels that do not pose a risk thanks to the Company’s robust and reputable shareholding structure.
The TRNC Insurance Sector experiences fierce competition due to the excessive number of companies and sector structure involving a high product concentration. Moreover, the geographic and population limitations of island economy put pressure on the sector development. Accordingly, when the effects of inflation and foreign exchange rates are taken into account, the sector realized a contraction in terms of total premium production despite a low increase in absolute value. The Company maintained its position among the top rankings regarding premium production and was exposed to similar effects with the sector through generating low growth in premium production compared to the previous periods figures despite its standing above sector averages. The profitability ratios of the Company improved and maintained its above sector average positioning through the continuing improvement in portfolio structure in favor of segments with relatively low loss ratio levels and the technical profit exercising a higher increase than premium production growth stemmed from damage distribution by segments and reinsurer’s share of the segments. The Company maintained its ‘Positive’ outlook for the upcoming periods mainly due to generated supporting potential of assets and equity via internal sources thanks to dividend payment realized in the current year which was almost equal to the current year’s first-half profit. The possible effects on the Company and the TRNC of the risk and opportunities to arise out of restructuring process of the organs of the state following the failed coup attempt will continue to be monitored.”
JCR Eurasia Rating maintains the opinion that the major controlling shareholder, Creditwest Bank Ltd., and members of the Altınbaş Family have the willingness and experience to ensure long term liquidity and equity within their financial capabilities when required and to provide efficient operational support to Creditwest Insurance Ltd.. In this regard, the Company’s Sponsor Support grade has been affirmed as (2).
When the Company’s operating track record, market effectiveness, portfolio structure evolving in favor of segments with relatively low loss ratio levels, profitability ratios, organizational structure and equity level are taken into account, we, as JCR Eurasia Rating, are of the opinion that Creditwest Insurance Ltd. has reached the level of adequate experience and facilities to manage the incurred risks on its balance sheet regardless of any assistance that may be provided by the shareholders, provided that it maintains its effectiveness in the market. Within this context, the Stand Alone grade of the Company has been affirmed as (A) in the JCR Eurasia Rating notation system.