S&P Global Ratings has raised the long-term issuer credit and insurer financial strength ratings for African Reinsurance Corp. (Africa Re) and its South African subsidiary, African Reinsurance Corp. (South Africa) Ltd., to ‘A’ from ‘A-‘, driven by its long track record of strong operating performance while managing foreign currency risks as a result of operating in African countries.
The company’s track record indicates disciplined pricing, prudent risk selection, and effective retrocession management across a diversified book of business. Africa Re reported robust underwriting profit for the first nine months of 2025, with a combined (loss and expense) ratio of about 84% under International Financial Reporting Standards (IFRS) 17, and net income of $130 million.
S&P commented, “We forecast that Africa Re will report profit averaging $130 million-$150 million over the next three years, supported by strong underwriting results and investment income. Although foreign exchange effects may introduce some volatility, given the mix of local currency premiums and US dollar reporting, the reinsurer has historically absorbed these pressures without materially weakening its bottom line.”
Capital adequacy is expected to be well above the 99.99% confidence interval based on S&P’s risk-based model over the next three years, as its sizable absolute capital above $1 billion provides a substantial cushion relative to the company’s risk exposures.
S&P added, “The reinsurer’s conservative risk selection, prudent retrocession program and robust internal capital generation support a stable and resilient capital position. We expect Africa Re to maintain the same level of capital adequacy.”
Africa Re benefits from a strong, well-established franchise across the African continent, and as a supranational institution, it is not under the control of any specific insurance regulator or regulated by a specific regulatory framework.
Due to its status as a supranational entity, it promotes and supports African re/insurance markets’ growth and therefore benefits from compulsory cessions in most African countries. This allows it to underwrite business in markets that may be inaccessible to smaller or less-established reinsurers, providing both scale and resilience.
S&P said, “Over time, Africa Re has built deep relationships with national and regional insurers, allowing it to write business over and above the 5% treaty compulsory cessions, which accounted for only 7% of gross premium income in 2024.”
S&P stated that it will monitor the firm to update its ratings; however, it is unlikely, S&P would lower the rating on Africa Re over the next 12-24 months. Meanwhile, the possibility of a positive rating action is also remote over the next 24 months.
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