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Chuks Udo Okonta
S&P Global Ratings on Friday, June 27, 2025 revised its outlook on GIC Re South Africa to positive from stable, following an error correction.
S&P Global Ratings in a document obtained by Inspenonline said in accordance with its criteria “General Criteria: Group Rating Methodology,” published on October. 21, 2016, the outlook on GIC Re South Africa should have been revised when it revised its outlook on the South African sovereign on Nov.15, 2024.
It submitted that accordingly, based on the provision of the criteria, on June 27, 2025, it corrected the oversight and has now affirmed its ‘BB+’ financial strength and issuer credit ratings on GIC Re SA and revised the outlook to positive, in line with the revision of the outlook on South Africa.
“We also affirmed our ‘zaAAA’ South Africa national scale rating on GIC Re SA. National scale ratings for South Africa do not carry an outlook,” it added.
The outlook revision on GIC Re SA, the rating agency said reflects the positive outlook on the South African sovereign and its view of GIC Re’s creditworthiness, stating that as of June 2025, the outlook on South Africa is positive and its view of parent GIC Re’s creditworthiness is likely to improve.
“We revised our outlook on GIC Re SA given that we would likely upgrade GIC Re SA if South Africa were to be upgraded and if the creditworthiness of GIC Re improves.
“We note that if only one of the two scenarios materializes, then the rating would be limited to the lower of the two,” S&P Global Ratings posited.
It maintained that the affirmation of the ratings on GIC Re SA reflects its expectation that the insurer will continue to benefit from ongoing financial and operational support from its wholly owned parent, GIC Re . GIC Re SA benefits from rating uplift due to the support of its parents.
“We believe GIC Re’s commitment to GIC Re SA is unchanged. Serving as the group’s key hub in Africa, GIC Re SA continues to expand its sub-Saharan business.
“GIC Re SA will likely continue to receive financial and operational support from GIC Re. GIC Re SA utilizes reinsurance from the parent and, in this regard, reinsurance utilization has remained above 70 per cent over the past few years, providing resilience against any potential volatility in capital and earnings,” it said
It noted that GIC Re SA’s robust capital partly moderates potential asset-risk volatility, given the assets are in local banks and sovereign bonds with average credit quality at the ‘BB’ range.
“We anticipate GIC Re SA will maintain its positive net profitability over the next 12 months. GIC Re SA did not experience material claims from the natural catastrophe events that occurred in the region in 2024. This, together with some price adjustments, resulted in an improved combined ratio at 63 per cent based on financial year-end March 2024 results–against an average of 84 per cent over the past five years (financial years 2020-2024, ending March 31). Going forward, we expect a combination of organic growth in South Africa and geographic expansion outside the country to support gross premium growth and ultimately improve underwriting profitability. This, together with sustained investment income, will support the reinsurer’s positive net income. We therefore expect the combined ratio to be 75 per cent-80 per cent and return on equity of eight per cent-nine per cent.
“As such, we expect GIC Re SA to maintain capital adequacy above the 99.99 per cent confidence level as measured by our risk-based model for 2025-2026,” the agency submitted.
It noted that GIC Re SA’s group status continues to benefit from a parental guarantee that covers its obligations (although it is not fully in line with our “General Criteria: Guarantee Criteria,” published Oct. 21, 2016), as well as capital injections seen historically. “We rate GIC Re SA above our foreign currency ratings on South Africa.
“This is because we believe that GIC Re will continue to support GIC Re SA operationally and financially when needed.
“We also expect the parent would support GIC Re SA with access to capital and liquidity during a severe stress scenario, including a default of South Africa,” it said.
The positive outlook on GIC Re SA, it added mirrors its positive outlook on the South Africa sovereign rating and its positive view of the creditworthiness of the parent, GIC Re.
According to the agency, the most likely reason for an outlook revision to stable over the next 12 months would be a similar action on the sovereign or a deterioration of GIC Re’s creditworthiness. While unlikely, stressing that it may also downgrade GIC Re SA if its importance to the parent weakens substantially.
It noted that the most likely reason for an upgrade of GIC Re SA over the next 12 months would be a similar action on the sovereign and the strengthening of GIC Re’s creditworthiness.
