Declining rates and rising claims hit African reinsurers’ profits, says Africa Reinsurance Pulse

Lower rates and higher claims are denting the profits of reinsurers in Africa, who are also worried about political uncertainties.

That’s according to the Africa Reinsurance Pulse (ARP), a report produced by Swiss research firm Dr. Schanz, Alms & Company, based on interviews with major players in the industry.

“The mood among Africa’s reinsurance executives has become more bearish as declining rates and rising claims weigh on the profitability of the African reinsurance markets,” said the ARP, which puts the current premium volume at some $ 7.5 billion. The ARP said Africa’s economies are still recovering from the commodity crisis of 2016, which highlighted the continent’s vulnerability to external shocks.

“Executives are once again concerned about the current outlook in light of renewed economic and political uncertainties,” said ARP.

However, the senior executives of Africa’s leading brokers and reinsurers interviewed also expect that the inflow of excess capacity from advanced markets into the continent has finally come to a standstill. In fact, insured values as well as premiums might benefit from the current economic growth and outgrow GDP, said ARP.

According to ARP’s assessment, reinsurance will have benefitted in line with insurance market growth, surpassing for the first time the US$ 7.5 billion mark.

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