13 July 2017News

AM Best concerned by Africa Re’s capital structure

The financial strength ratings of Africa Re have been placed under review with negative implications by AM Best, which has cited concerns over the permanence of its capital structure.

Africa Re has a financial strength rating of ‘A’. The rating agency said it has reviewed the company’s capital structure and is concerned by the rights of shareholders to sell their shares back to Africa Re.

It said that if Africa Re’s management team cannot address these concerns, rating downgrades can be expected.

“These rating actions follow further analysis of the corporation’s capital structure, namely the rights of shareholders to sell their shares back to Africa Re,” AM Best said.

“The unique feature of these put options highlights potential concern over the permanence of the capital structure. Africa Re’s management team has initiated a course of action that will likely address AM Best’s concern and result in the corporation’s ratings being affirmed. However, if this is unsuccessful, rating downgrades can be expected.

“Supporting rating factors include Africa Re’s recent robust financial performance and the strong demand that the corporation has for its shares. Africa Re has a stable shareholder base composed of a diverse range of African (re)insurance companies and nation states, many of which are strategic investors. Furthermore, due to the corporation’s low level of underwriting leverage, its balance sheet strength is able to withstand a number of investors exercising their put options in a short time frame.”

Did you enjoy reading this story?  Sign up to our free daily newsletters and get stories like this sent straight to your inbox.

Today’s stories

Beazley picks Dublin for EU subsidiary

Chubb reveals new global underwriting boss following retirement

CNA hires Hartford SVP for new worldwide P&C claim role

Hiscox USA boosts professional risks unit with XL and Travelers duo

Alliant expands US Northeast footprint with new M&A deal

European storm Egon loss estimate reaches €275m: PERILS

Cunningham Lindsey appoints corporate risks director

Don't miss our monthly insurtech email newsletter - sign up today

Already registered?

Login to your account

To request a FREE 2-week trial subscription, please signup.
NOTE - this can take up to 48hrs to be approved.

Two Weeks Free Trial

For multi-user price options, or to check if your company has an existing subscription that we can add you to for FREE, please email Elliot Field at efield@newtonmedia.co.uk or Adrian Tapping at atapping@newtonmedia.co.uk

More on this story

6 December 2016   African Reinsurance Corporation (Africa Re) said the depreciation of its main operating currencies combined with losses in Ghana and Nigeria has led to it being a challenging year for the company, in its third quarter results.
14 August 2017   Africa Re said on Aug. 14 that large losses in South Africa (the Cape fire & storms) and in the Middle East (Abu Dhabi National Oil Company) pushed down its profit in the first half of 2017.