JCR Eurasia Rating affirming the credit rating of Segure Insurance Ltd. as ‘A (Trk)’ on the Long Term National Scale while upgrading its Long Term International FC and LC ratings to ‘BB’ from ‘BB-' (July 27, 2012)

JCR Eurasia Rating has affirmed the credit rating of Segure Insurance Ltd. as ‘A (Trk)’ on the Long Term National Scale and upgraded its Long Term International FC and LC ratings to ‘BB’ from ‘BB-‘ along with ‘stable’ outlooks. Other notes and details of the ratings are given in the table below:

Long Term International Foreign Currency : BB /(Stable Outlook)
Long Term International Local Currency : BB /(Stable Outlook)
Long Term National Local Rating : A (Trk) /(Stable Outlook)
Short Term International Foreign Currency : B /(Stable Outlook)
Short Term International Local Currency : B /(Stable Outlook)
Short Term National Local Rating : A-1 (Trk)/(Stable Outlook)
Sponsor Support : 2
Stand Alone : AB

Segure, by outperforming the sector through achieving much higher cumulative asset and premium growth rates than the averages, has decoupled itself from the sector and increased its market share in this regard.

The enactment of the Insurance Services Law at the end of 2010 is believed to curb the adversities of competition based on price leadership; increase consolidation in the sector through the introduction of new minimum capital requirements; and improve the legal status of the business activities. Some of the necessary regulatory statutes regarding the implementation of the Law have already been issued.

Although the constraints engendered by the TRNC’s political isolation and geographically restricted territories continue to threaten the benefits of network externalities to be obtained by the companies operating in the sector, the low levels of insurance density and penetration evidence high potential for growth of the sector.

The global insurance industry’s contraction period of premium volume in 2008 and 2009 occurring after a long period of time; the adversities of historically highest insured loss amounts of worldwide natural catastrophe events during 2011 as well as the ones that took place in the TRNC during 2010 have not been an impediment on the growth of the TRNC insurance sector.

When the non-financial standing and expected supportive potential of the major shareholders are considered and while the absence of any institutional shareholder within the shareholder structure of the Company has also been taken into account, it is believed that the main controlling shareholders holding executive positions in the Company have the adequate knowledge and experience to provide efficient operational support and have the willingness to provide assistance to Segure. On the other hand, although no public authority or professional organization exists to provide the Company and the sector in general with financial support, the process of development of sector-specific legislation has been initiated through the promulgation of the new Law and some relevant regulatory statutes therein. Based on these assessments, the Sponsor Support grade of Segure Insurance has been upgraded to (2), which denotes a high external support possibility.

Provided that it maintains its client base and business volume, it is believed that Segure has the capabilities, experience and facilities to manage the incurred risks on its balance sheet via its core non-life insurance operations without any financial assistance from the shareholders. Within this context, the Stand Alone grade of the Company has been affirmed as (AB) in JCR-ER’s notation system taking into account its considerably high asset and premium growth rates above the sector averages, sustained improvement in its liquidity indicators, continuation of innovative product development processes targeted at niche markets, business agility and managerial resiliency against fluctuations. This grade denotes a high level of financial strength.

For more information regarding the rating results you may visit our internet site http://www.jcrer.com.tr or contact our analyst Mr. Zeki M COKTAN.

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