The international rating agency, Global Credit Rating, GCR, has again for the second consecutive year rated Sovereign Trust Insurance Plc A- in its recent solvency and operational report for financial institutions and other allied businesses released in January, 2009.
Global Credit Rating noted that Sovereign Trust Insurance Plc has shown a great deal of consistency with a lot of potentials for growth in the years to come. The listing of the over-subscribed shares in 2008 helped in increasing the shareholders’ base of the company which ultimately translated in its funds liquidity. In the rating agency’s opinion, Sovereign Trust Insurance Plc is very strong in liquidity with more than adequate claims coverage that compares well to industry averages.
The underwriting firm also increased its underwriting capacity and renegotiated its reinsurance programme, thus limiting its exposure to 2% of its total shareholders’ interest. The solvency margin stood at 90% which is well above the regulatory requirement.
In terms of peer to peer performance comparison, Sovereign Trust Insurance Plc 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 creatively been able to develop a good mix of its clientele base with personal lines contributing 20% of its Gross Premium Income. The introduction of three new products in 2008 complemented the efforts of Management at driving retail business initiatives in the industry.
The report also stated that as a result of STI’s increased underwriting capacity and geographical diversification, the organization achieved a strong organic growth. The earned loss ratio which stood at 23% compares favourably well with the industry standard.
As observed by the Rating Agency, long outstanding premium income from brokers is an industry wide problem that needs to be tackled holistically. The report also asserts that insurance penetration remains very low in the country at an estimated ratio of 0.5% for general insurance businesses.
Sovereign Trust Insurance Plc is one of the fastest growing Insurance companies in Nigeria with 23 branches spread across the country. The company has over the years demonstrated commitment to optimally maintain a leading position in the insurance industry in Nigeria.