Sub-Saharan Africa remains a long-term opportunity for reinsurers, AM Best report
Insurance markets across sub-Saharan Africa provide an opportunity for diversification and an avenue for growth, and so remain attractive to international reinsurers taking a longer-term view.
In a new Best’s Market Segment Report, “Sub-Saharan Africa Remains a Long-Term Opportunity for Reinsurers,” AM Best notes that sub-Saharan African reinsurers rated by AM Best have experienced strong growth over the past decade, with a 10-year compound annual growth rate of gross written premiums (GWP) of more than 7% (calculated in U.S. dollars).
Increases in GWP have been driven predominately by the non-life insurance segment, with life business at a nascent stage in many countries.
Tim Prince, director, analytics at AM Best, said: “Despite uncertain market conditions, the rating fundamentals of the majority of AM Best-rated African reinsurers have been stable. For all of these entities, risk-adjusted capitalisation remains at the strongest level, largely as a consequence of their often underutilised capital bases relative to their low underwriting risk exposures.”
However, the report also notes that limitations in the strength of sub-Saharan African reinsurers’ risk management are an ongoing concern across the region. Tim Prince adds, “AM Best’s enterprise risk management (ERM) assessment of individual companies, which has typically resulted in marginal or weak assessments, takes into account the high-risk management requirements for companies operating in environments with high economic, political, and financial system risk—which, in turn, have negative impacts on the final rating outcome.”