Founded in 1992 as a property development company, Trustco has diversified its operations to focus on micro insurance, micro finance for education and technology solutions aimed at the financial services sector.
According to GCR, the rating was underpinned by low gearing, strong capitalisation and a solid earnings track record, whilst, in terms of its core insurance operations encompassing legal assistance, funeral and life cover for the mass market, the group is strategically well placed and dominates its target market in Namibia. Furthermore, being a dual listed entity, Trustco conforms to a high level of corporate governance in line with the King Reports on Corporate Governance.
However, annuity income growth from core operations has slowed as these businesses have matured and high market penetration rates have been achieved. In recent years, earnings have been substantially supported by the phased sale of property holdings. The sales have also served to augment total funding, allowing low net gearing levels to be maintained of 17% as at year end.
Growth in its education focused micro finance business has been supported through securing funding from development finance institutions (DFIs), with a facility from the International Finance Corporation already fully utilised, whilst funding lines from the African Development Bank and two other DFI's are currently being negotiated.
Liquidity risk appears well managed, with liquidity buffers maintained through financing relatively short-term assets with longer term liabilities. The group has taken a conservative approach to managing capital, with Trustco Finance (the group's micro lending arm) reflecting a risk weighted capital adequacy ratio of 64% as at 31 March 2012.
Prospects going forward rely on the successful replication of the Namibian operations in South Africa, as well as concluding strategic partnerships to expand the access to insurance through mobile telephony in emerging markets.
