Reinsurers operating across sub-Saharan Africa have continued to deliver strong underwriting performance, despite signs of moderation in market conditions, according to AM Best, a global insurance credit ratings agency and provider of industry data and analysis.
In its latest Best’s Market Segment Report, Sub-Saharan Africa’s Reinsurers Maintain Robust Performance Amid Moderating Market Conditions, AM Best said the region’s reinsurance market continues to offer opportunities for further profitable expansion.
AM Best identified the region’s extensive natural resource base, long-term economic growth prospects and relatively low levels of insurance penetration as factors that could support the development of the reinsurance sector. The company said these underlying conditions provide scope for increased insurance activity and greater demand for reinsurance capacity over time.
At the same time, AM Best noted that the operating environment remains subject to external risks. Renewed geopolitical uncertainty, including the continuing conflict in the Middle East, could affect reinsurers depending on their exposure to particular territories and lines of business.
AM Best said the potential impact of these developments is likely to differ between individual companies, with geographical and business diversification providing an important means of reducing concentration risk.
Naz Botea, Senior Financial Analyst at AM Best and one of the report’s authors, added: “Overall, AM Best-rated reinsurers in the region are expected to remain resilient amid this dynamic risk landscape, supported by good capital buffers that have grown in recent years through robust internal capital generation, as well as the growing geographical diversification of invested assets and revenue.”
AM Best said reinsurers’ strengthened capital positions should continue to support the sector as market conditions evolve. The company pointed to sustained internal capital generation, together with broader geographical diversification of assets and revenue, as factors that have contributed to the resilience of AM Best-rated reinsurers in the region.
