Africa Re expands to Brazil, confirms A.M Best rating

Chuks Udo Okonta


Africa Re has been granted a license to operate as an Occasional Reinsurer in Brazil, Inspen has learnt.
A statement from the firm said the important step will allow the firm expand its operations for the first time in Latin America, adding to Africa and Asia. A Framework for Cooperation in Reinsurance Business has been signed between Africa Re and IRB-Brasil Re, the leading reinsurance company in Brazil.

Africa Re will start to write some businesses from the Brazilian market and benefit from exchange of competence through cross-attachment of technical staff, increase of shares in retrocession program and extended underwriting capacity. Later, Africa Re shall register as an Admitted Reinsurer.

In another positive development, A.M. Best and Standard& Poor’s have affirmed the Financial Strength Rating and the Issuer Credit Rating/Anchor of the African Reinsurance Corporation. It retained its impressive A- in both Financial Strength Rating and Issuer Credit Rating/ Anchor

The A.M. Best ratings of Africa Re reflect its strong risk-adjusted capitalization and operating performance, as well as its established market position across the African reinsurance market. Although Africa Re is exposed to the unstable political and economic environment in some regions of Africa, these risks are largely mitigated by its geographic diversity, asset-liability matching strategy and the ease with which the corporation can shift its operations between its regional offices.

The Standard & Poor’s ratings - after Insurance Criteria change- reflect their view of Africa Re's satisfactory business risk profile and strong financial risk profile, built on a strong competitive position in Africa's reinsurance market, as well as its very strong capital and earnings. S&P derives their 'a-' anchor for Africa Re from the combination of these two factors and view potential modifying factors - adequate enterprise risk management (ERM), satisfactory management and governance, and exceptional liquidity - as neutral for the ratings. The S&P ratings on Africa Re reflect the company's stand-alone credit strengths and do not include any uplift for support from the Nigerian sovereign. At the same time, the ratings are not constrained by the sovereign rating due to Africa Re's significant asset and premium diversification.


In an exclusive interview, Corneille Karekezi, the Group Managing Director / Chief Executive Officer of the leading African reinsurer, Africa Re, discussed the latest achievements after the successful Annual General Assembly of the company in Dakar, Senegal.
In the last financial year 2012, Africa Re reported a 35 per cent increase in pre-tax earnings to USD 93 million. Results were supported by a rebound in the equity markets, resulting in higher investment returns (including fair value gains) of 5.7% (2011: 3.7%), and a stable combined ratio of 91%.

Africa Re's operating performance remains strong, underpinned by stable underwriting results and solid investment returns, and continues to meet its strategic objectives comprising return on average equity (ROE): 14% - 17%, return on revenue: 8.7% - 12.2%, net combined ratio: 92% - 97% and net loss ratio: 61% - 66%.

Africa Re's strong risk-adjusted capitalization was further strengthened (in part) by the successful execution of its on-going capital-raising initiative in 2012. This has resulted in an increase in paid-up capital to USD 287 million in 2012 from USD 100 million in 2009. Higher retained earnings ,underpinned by the corporation's strong income generation, also contributed to the rise in shareholders' funds to USD 609 million in 2012 (2011: USD 482 million).

Africa Re is a reinsurance company with headquarters in Lagos (Nigeria). Africa Re has six Regional Offices in Casablanca (Morocco), Nairobi (Kenya), Abidjan (Côte d’Ivoire), Port Louis (Mauritius), Cairo (Egypt), Lagos (Nigeria) for English-speaking West Africa as well as two subsidiaries in Johannesburg (Africa Re South Africa Ltd) and in Cairo (The African Takaful Reinsurance Company). The Corporation is owned by 41 member States of the African Union (AU), the African Development Bank (AfDB), the International Finance Corporation (IFC), the German Investment and Development Corporation (DEG), the Dutch private sector financing company (FMO), PROPARCO (subsidiary of the Agence Française de Development), IRB-Brasil Re and about 100 insurance and reinsurance companies.