AM Best has revised the outlook of African Reinsurance Corporation’s financial strength rating to positive from stable, based on an improvement in underwriting results.
The rating agency also affirmed the financial strength rating of A- and issuer credit rating of a- for Africa Re.
“The revised outlook reflects Africa Re’s enhanced risk-adjusted capitalisation, along with the improvement in underwriting results that followed the actions taken by management to focus on profitable growth.
“Additionally, the positive outlook considers Africa Re’s established market position in the increasingly competitive African reinsurance market and measures in place to mitigate exposure to political and economic instability in the Continent,” said the rating agency.
Since 2010, Africa Re has raised a total of $159 million, which has partly supported growth of shareholders’ funds to $677.5 million at year-end 2013.
The rating agency said that Africa Re’s ability to raise capital over the past four years illustrates the benefit of its status as a pan-African reinsurer and its shareholder structure, which predominantly comprises member states and re/insurance companies in Africa, as well as supranational organisations.
It said that in the future Africa Re’s risk-adjusted capitalisation is expected to be sustained by retained earnings.
“A partly offsetting factor is the technical performance of the South African account, which remains weak. This reflects the impact of protracted soft market conditions and the high frequency of weather-related events,” said AM Best.
AM Best, Africa, Africa Re, Ratings