(Ecofin Agency) - The rating means that Moody's still considers the African Commercial Insurance Agency to have low credit risk and is therefore likely to meet its long-term commitments.

The American financial rating agency Moody's has, in an analysis published on Tuesday 7 March, confirmed the A3 insurance financial strength of the African Commercial Insurance Agency (ACA) for the fifth consecutive year.

Moody's, whose activity includes among other things assessing and measuring debt distress, believes that this A3 rating confirms the ACA’s low credit risk, meaning the agency will likely be able to meet its long-term commitments (over 12 months or more).

The rating agency also revised the African Commercial Insurance Agency's outlook from "stable" to "positive". According to the Agency, this revision “reflects the strong growth in ATI's membership base - that has resulted in improved portfolio diversification and strengthened capital adequacy, and its good profitability despite the challenging operating environment.”

It also specifies that the Aca "benefits from its preferred creditor status (PCS) amongst sovereign member states which protects it from the risk of default by member sovereigns through securing recoveries against claims paid on guarantees.”

The rating will improve the ability of the ACA -which was founded by African states to provide political risk insurance, credit insurance, and guarantees- to provide more support to its member countries, but also attract new shareholders and increase its portfolio.

For the rating agency, the ACA’s rating will be upgraded if the agency continues to demonstrate “strong underwriting performance and ability to recover claims under the preferred creditor arrangements.”

Chamberline Moko