S&P affirms Africa-Re rating with stable outlook

Global ratings agency Standard & Poor’s has affirmed the African Reinsurance Corporation (Africa Re) financial strength rating at A-, with a stable outlook.

The Lagos-based Pan-African reinsurer said the agency noted it has sufficient capital buffer to absorb potential deterioration in its asset credit quality and it also has limited exposure to Covid-19 related classes of business.

“The rating agency considered Africa Re’s strong brand and reputation, with many cedants across Africa, as a key differentiator relative to other international and regional players on the continent,” said Africa Re in a statement.

“With a broad diversification of its underwriting portfolio, Africa Re is able to ensure stability in its operating performance, cushioning the effect of weaker economic conditions and the higher-risk operating environment that characterises most of Africa”.

Africa Re was established in 1976 by 36-member states of the African Union (AU) and the African Development Bank Group. Currently it has 41 member states including Kenya, and more than 100 African insurance/reinsurance companies from the 41-member countries.

Africa Re chief executive Corneille Karekezi had earlier warned it may take months before the insurance industry can fully understand the impact of the Covid-19 pandemic on its business.

“We were asked by our board to stress test the possible exposures from the pandemic and they were surprised by our optimism when we reported back earlier this year," he said.

"However, the problem is that today we don’t know the extent of the damage or the extent of the recovery. And that is the extent of recovery in all those other sectors for which we sell insurance,” he said in an earlier interview.

Mr Karekezi predicted that insurers in more mature markets may well face greater problems because of the shape of their books.