Global rating agency AM Best has affirmed the credit ratings of Kenya Reinsurance Corporation (Kenya Re), keeping the outlook stable even as it raised concerns over the reinsurer’s governance and risk management practices.
The US-headquartered agency maintained the reinsurer’s financial strength rating (FSR) of B (fair) and the long-term issuer credit rating of “bb+” (fair). It also kept a stable outlook on both ratings.
AM Best says it assigns B (fair) rating to insurance companies that have “a fair ability” to meet their ongoing insurance obligations. The agency rates financial strength of such insurers as vulnerable to adverse changes in underwriting and economic conditions.
Kenya Re’s FSR of B (fair) sits at the midpoint of AM Best’s 13-tier rating scale, which ranges from superior (A++) at the top to poor (D) at the bottom.
“The ratings reflect Kenya Re’s balance sheet strength, which AM Best assesses as very strong, as well as its adequate operating performance, neutral business profile and weak enterprise risk management,” said AM BEST in a statement.
AM Best said Kenya Re’s balance sheet strength assessment is underpinned by its risk-adjusted capitalisation which is at the” strongest level.” The reinsurer’s capital position provides a sufficient cushion against underwriting and investment risks.
However, AM Best cautioned that the company faces several risks and weaknesses including governance challenges, citing the recent suspension of managing director Hillary Wachinga in unclear circumstances.
“Kenya Re’s risk management framework is evolving and its risk management capabilities are weak when compared with its risk profile. AM Best notes that the company’s managing director was placed under suspension in September 2025, due to an ongoing internal matter. AM Best will continue to monitor the outcome of this matter,” said the rating agency.
Despite these concerns, AM Best said the stable outlook reflects confidence that Kenya Re’s strong capitalisation and improving underwriting performance will sustain its financial position in the near term.
Kenya Re’s operating performance was rated as “adequate,” supported by improved underwriting results and healthy investment income.
AM Best said the company’s average return on equity has exceeded domestic inflation over the past five years, indicating steady profitability despite economic headwinds.
The reinsurer’s non-life insurance portfolio showed improvement, with a combined ratio of 78.1 percent in 2024, compared to 97.7 percent in 2023, based on International Financial Reporting Standard 17.
The combined ratio measures the money flowing out of an insurance company in the form of dividends, expenses and losses. AM Best noted that since initiating corrective actions in 2020, Kenya Re’s non-life portfolio has reported technical profits in most years.
AM Best noted that Kenya Re continues to benefit from its privileged market position, backed by compulsory reinsurance cessions from local insurers, as well as its geographic diversification across Africa, Asia and the Middle East.
Insurers in Kenya are currently obligated to place a fifth of their reinsurance business with Kenya Re but this is set to rise to a quarter if the recently published proposals under the draft Insurance (Amendment) Regulations, 2025 are adopted.
