{"id":61130,"date":"2024-02-17T17:41:38","date_gmt":"2024-02-17T17:41:38","guid":{"rendered":"https:\/\/www.africa-press.net\/south-africa\/all-news\/insurers-will-lose-r6-billion-over-south-africas-junk-rating"},"modified":"2024-02-17T17:41:38","modified_gmt":"2024-02-17T17:41:38","slug":"insurers-will-lose-r6-billion-over-south-africas-junk-rating","status":"publish","type":"post","link":"https:\/\/www.africa-press.net\/south-africa\/all-news\/insurers-will-lose-r6-billion-over-south-africas-junk-rating","title":{"rendered":"Insurers will lose R6 billion over South Africa\u2019s junk rating"},"content":{"rendered":"

Africa-Press – South-Africa. <\/strong><\/span>South Africa\u2019s BB- sovereign rating may cost local renewable energy insurers R6 billion over the next five years.<\/p>\n

This is according to Crawford Dougall, an insurance company servicing both local insurance and international reinsurance markets.<\/p>\n

South Africa\u2019s credit rating has remained below investment grade since 2017. Despite a re-evaluation from S&P last year, the sovereign rating is still BB-.<\/p>\n

A poor credit rating means an increasing number of renewable energy projects must be insured through foreign insurance firms.<\/p>\n

According to Crawford Dougall\u2019s head of renewable energy and infrastructure, Sophie Maggs, most renewable energy projects developing in South Africa raise debt funding from South African lenders.<\/p>\n

Among the requirements for lenders to fund a utility-scale project is that at least 85% of the insurance programme is placed with A-rated insurance markets, Maggs explained.<\/p>\n

Many of South Africa\u2019s top insurers are rated AA or higher, but they are still precluded by funders as the country\u2019s BB-sovereignty rating acts as a cap.<\/p>\n

Hence, the local insurance market is automatically disqualified from the vast majority of renewable energy projects despite being viable in all other regards.<\/p>\n

\u201cWe\u2019re talking about South African insurance companies that are otherwise very sound. We see strong balance sheets, strong solvency ratios, and the capacity and appetite to take on projects of this nature,\u201d said Maggs.<\/p>\n

\u201cBut, because of the credit rating, this precludes them from participating in these sorts of projects.\u201d<\/p>\n

Crawford Dougall said South Africa\u2019s domestic insurance sector may lose R1 billion in premiums this year as a result of the credit rating conundrum.<\/p>\n

This blow to the local insurance sector goes beyond the firms directly involved. \u201cThe country is losing out on a lot of insurance premiums, taxes, jobs and all the benefits that come with investment,\u201d said Maggs.<\/p>\n

A poor sovereign rating may, in part, block the economic and employment benefits that the fast-growing renewable energy sector promises.South Africa\u2019s sovereign rating has remained on a downward trend for over ten years.<\/p>\n

In 2020, S&P downgraded South African debt to a BB- credit rating with a stable future outlook. It placed South African debt on the brink of becoming very speculative.<\/p>\n

There was optimism last year when S&P lifted its outlook for South Africa to positive, giving investors hope that the credit rating would improve with time.<\/p>\n

This hope was short-lived, as S&P cut South Africa\u2019s outlook to stable because of deteriorating public infrastructure, load-shedding and poor economic growth.<\/p>\n

For More News And Analysis About South-Africa<\/a> Follow Africa-Press<\/a><\/strong><\/p>\n","protected":false},"excerpt":{"rendered":"

Africa-Press – South-Africa. South Africa\u2019s BB- sovereign rating may cost local renewable energy insurers R6 billion over the next five years. This is according to Crawford Dougall, an insurance company servicing both local insurance and international reinsurance markets. South Africa\u2019s credit rating has remained below investment grade since 2017. Despite a re-evaluation from S&P last […]<\/p>\n","protected":false},"author":84,"featured_media":61129,"comment_status":"open","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"footnotes":""},"categories":[2,5],"tags":[274,315,275],"class_list":["post-61130","post","type-post","status-publish","format-standard","has-post-thumbnail","hentry","category-all-news","category-economy","tag-africa-press","tag-africa-press-south-africa","tag-south-africa-2"],"yoast_head":"\nInsurers will lose R6 billion over South Africa\u2019s junk rating - South Africa<\/title>\n<meta name=\"robots\" content=\"index, follow, max-snippet:-1, max-image-preview:large, max-video-preview:-1\" \/>\n<link rel=\"canonical\" href=\"https:\/\/www.africa-press.net\/south-africa\/all-news\/insurers-will-lose-r6-billion-over-south-africas-junk-rating\" \/>\n<meta property=\"og:locale\" content=\"en_US\" \/>\n<meta property=\"og:type\" content=\"article\" \/>\n<meta property=\"og:title\" content=\"Insurers will lose R6 billion over South Africa\u2019s junk rating\" \/>\n<meta property=\"og:description\" content=\"Africa-Press – South-Africa. South Africa\u2019s BB- sovereign rating may cost local renewable energy insurers R6 billion over the next five years. This is according to Crawford Dougall, an insurance company servicing both local insurance and international reinsurance markets. South Africa\u2019s credit rating has remained below investment grade since 2017. 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