Sovereign Trust Hauls A- Rating In A Decade

Sovereign Trust Insurance Plc, has maintained a consistent A- rating with the international rating agency, Global Credit Rating, GCR, based in South Africa, spanning over a decade.

In the agency’s recent solvency and operational report for financial institutions in Nigeria and other allied businesses released in December 2020, Sovereign Trust Insurance, was awarded great potentials for growth in the years ahead considering some of the strategies that have been put in place to propel its operations.

Its therefore, no fluke with unbroken upticks from Global Credit Rating, the general insurer has been drenched with good rating in the past decade. Relying on its current data, the rating agency noted that the company has shown a great deal of consistency in claims paying obligations to different categories of customers spread all over the country.

The report, further stated that the rights issue in 2019 increased the shareholders’ funds of the company by 33.8% to N7.8bn by the end of 2019 as against the figure of N5.8bn in 2018.

As a result, the shareholders’ funds had increased to N8.2bn by the third quarter of 2020 which translated to 31% increase in the same corresponding period of 2019 with a figure of N6.3bn. The rating agency uptick Sovereign Trust strong in liquidity with more than adequate claims coverage that compares well to industry average.

Its capital adequacy is considered strong according to the rating report and this is underpinned by the sizeable capital base catering for the quantum of insurance and market risks assumed. In this regard, the ratio of shareholders’ funds to NEP (Net Earned Premium), improved to 189.2% in the Q3 of 2020 as against 130.9% in the corresponding quarter of 2019.

In terms of peer-to-peer performance comparison, the company did very well when compared with other selected insurers in terms of capital, total assets, gross premium income (GPI) and net premium income (NPI).

The company has a creative mix of its clientele with personal lines contributing 42% of its gross premium income during the rating period. The agency also noted that the introduction of the Enhanced Third-Party Motor Insurance Cover with the acronym E3P in 2019, complemented the efforts of management at driving retail business initiatives in the industry. Other new retail products already in the works will soon be introduced to the market.

The report also stated that STI’s increased underwriting capacity and geographical diversification, has led to sound business profile supported by a moderately strong competitive position and improved brand acceptance hinged on continuous marketing drive and a well-established brokers’ relationship of diverse business mix.

The rating agency aptly said insurance penetration remains very low in the country at an estimated ratio of 0.5% for general insurance businesses.