Rating Release
Agusto & Co. assigns a “Bbb+” rating to Allianz Nigeria Insurance Plc
The rating expires on 30 June 2020.
The rating assigned to Allianz Nigeria Insurance Plc (“Allianz Nigeria” or “the Insurer”) reflects its membership of the Allianz Group (“the Group”) – a €1.96 trillion multinational financial services company, headquartered in Munich, Germany with core businesses in insurance and asset management. Allianz Group has an insurer financial strength rating of ‘AA’ by S&P which was affirmed in August 2019. Membership of the Allianz Group provides the Insurer with technical expertise, product development, corporate governance and operating efficiencies. In addition, the Group offers strong reinsurance support for its member companies, including Allianz Nigeria. Following its acquisition of a majority equity stake in July 2018, Allianz demonstrated financial support to its Nigerian operations through a capital infusion of ₦5 billion to fund growth opportunities. Furthermore, in October 2019, the parent company committed to an additional capital injection of ₦12.5 billion. The proposed additional capital which will represent the Group’s second capital injection in less than two years will raise the Insurer’s capital base above NAICOM’s new regulatory minimum of ₦18 billion (for composite insurers) which becomes effective in December 2020.
The assigned rating also reflects Allianz Nigeria’s good capitalisation, low-risk retention vis a vis the Industry’s average and an experienced management team. Offsetting these positive rating factors are consistent financial losses recorded by the Insurer over the last seven years (with the exception of 2016 when profits were recorded on the back of FX revaluation gains) and the dependence on a major client for 30.1% of GPI. In addition, macroeconomic volatilities in Nigeria threaten the operations of insurance companies in the country.