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American rating agency A.M. Best has downgraded the long-term Issuer credit rating (Long-Term ICR) outlook of listed Kenya Reinsurance Corporation (Kenya Re) to negative from stable.
The insurance-focused agency said the negative outlook on the long-term ICR reflects "Kenya Re's poor technical performance in recent years".
It noted the performance has been demonstrated by non-life underwriting results that are significantly weaker than its historical average and regional peers in 2018 and 2019.
"While the company's net income improved to Sh4 billion (2018: Sh2.3 billion), this was primarily driven by a one-off unrealised gain of Sh1.9 billion from an investment property write-back," said A.M. Best in a statement.
"They regraded the long-term outlook from stable to negative because of the economic down turn due to Covid-19 and the discrepancy between the 2019 loss ratio from our projection of the same," said Kenya Re chief executive officer Jadiah Mwarania.
"They explained that revision of outlook is something they do often across the world. The rating at B is unchanged."
Kenya Re reported an unaudited non-life underwriting loss of Sh2.6 billion in 2019, significantly higher than the loss of Sh1.1 billion reported in 2018.
The deterioration in performance was not anticipated by A.M. Best and was driven primarily by the company's books in the Middle East and Asia.
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