Global rating agency AM Best affirms Financial Strength Rating of “A” of African Reinsurance Corporation
Global rating agency AM Best has affirmed the Financial Strength Rating of A (Excellent) and the Long-Term Issuer Credit Rating of “a” of African Reinsurance Corporation (Africa Re) (Nigeria).
The outlook of these Credit Ratings (ratings) is stable.
The ratings reflect Africa Re’s balance sheet strength, which AM Best categorises as strongest, as well as its strong operating performance, favorable business profile and appropriate enterprise risk management.
Africa Re’s risk-adjusted capitalisation, as measured by Best’s Capital Adequacy Ratio (BCAR), is comfortably in excess of the level required to support AM Best’s strongest assessment.
Prospectively, increasing capital requirements as a result of the Corporation’s expansion within its core African markets are expected to be supported by robust earnings. Additionally, the Corporation is likely to continue to benefit from its strong financial flexibility, which has been demonstrated in recent years through its capital raising initiatives.
Headquartered in Nigeria, with business written across the continent, Africa Re’s underwriting performance has been consistently strong, as evidenced by its five-year average combined ratio of 92% (2013-2017), as calculated by AM Best.
Whilst AM Best expects underwriting performance in 2018 to worsen due to a number of large losses and adverse reserve development related to 2017 catastrophe events, the Corporation’s combined ratio is not expected to materially exceed 100%.
The Corporation’s good underwriting performance is attributable to its geographically well-spread insurance portfolio and evolving risk management, which has resulted in strengthened risk controls and monitoring capabilities to support operations.
The underwriting performance of its South African and international business remains a partly offsetting rating factor. Underwriting performance further benefits from Africa Re’s robust market position, which is supported by its privileged access to business through its compulsory legal cessions, strong reputation in local markets and long-standing relationships with stakeholders.
