Agusto & Co. assigns a “Bbb (ZWL)” rating and a “C” (international rating) with a ‘negative’ outlook to ZB Reinsurance Limited.
The rating expires on 30 June 2021.
The rating assigned to ZB Reinsurance Limited (“ZB Re” or “the Reinsurer”) reflects its membership of the ZB Financial Holding Company Limited (“ZBFH” or “the Group”), a Zimbabwe based financial services company with total assets of ZWL$3.5 billion (or US$209.6 million) as at 31 December 2019 and interests in banking, insurance, stockbroking, investment and asset management. The Group supports ZB Re’s underwriting business through shared services, product cross-selling and risk management. The assigned rating is underpinned by the Reinsurer’s good liquidity profile and capitalisation ratios, acceptable underwriting profits and an experienced management team.
Offsetting these positive rating factors, however are long term uncertainties in the political environment and weak macroeconomic fundamentals in Zimbabwe, characterised by hyperinflation and disruptive currency reforms that adversely impact investment returns. These are further worsened by the novel COVID-19 (coronavirus) pandemic and an apathy for insurance in the country.
The negative outlook is based on our expectations that the Reinsurer’s performance will be moderated by the pandemic and lingering macroeconomic challenges as evidenced by hyperinflation and a further threat of currency devaluation.
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