Joy Agwunobi
African Reinsurance Corporation (Africa Re) has received an upward revision of its credit and financial strength ratings from S&P Global Ratings, following what the agency described as a consistent display of strong underwriting discipline and resilient earnings.
In a new assessment, S&P upgraded the corporation’s long-term issuer credit and insurer financial strength ratings to ‘A’ from ‘A-’. The rating on its South African subsidiary, African Reinsurance Corp. (South Africa) Ltd. which benefits from an unconditional parental guarantee was also raised to the same level. The outlook on all ratings was affirmed as stable.
S&P explained that the higher rating reflects Africa Re’s ability to maintain steady operating results despite an increasingly complex risk landscape across the continent. According to the agency, the reinsurer has demonstrated consistent underwriting margins, cautious risk selection practices, and effective retrocession management across its diversified lines of business.
The rating agency highlighted that Africa Re recorded particularly strong results in the first nine months of 2025. During this period, the corporation delivered a combined ratio of about 84 percent under IFRS 17, indicating robust underwriting performance, and posted net income of $130 million.
Looking ahead, S&P projected that Africa Re’s profitability would remain solid over the next three years. The firm forecasts annual net earnings in the range of $130 million to $150 million, supported largely by continued underwriting strength and stable investment income. While S&P acknowledged that currency fluctuations across African markets could introduce earnings volatility especially given the mix of local currency premiums reported in U.S. dollars, it noted that Africa Re has historically absorbed such pressures without significant deterioration in its financial performance. This track record, the agency added, underscores the reinsurer’s earnings resilience.
S&P also emphasised Africa Re’s very strong capital position. It expects the corporation to maintain capital adequacy at levels exceeding the 99.99 percent confidence interval under its risk-based capital model. The company’s capital base already above $1 billion, provides what the agency described as a substantial buffer relative to its risk exposures. Its wide geographic footprint and diversified portfolio were cited as key elements that reduce capital requirements under S&P’s model, while its conservative risk selection and prudent retrocession arrangements continue to reinforce this position.
According to the rating firm, the stable outlook reflects expectations that Africa Re will sustain its competitive posture across major African reinsurance markets and continue to deliver strong underwriting performance, with an average combined ratio around 90 percent. The reinsurer is also expected to preserve capital adequacy at levels consistent with extreme stress scenarios.
However, S&P pointed out conditions that could trigger a future downgrade, although it described such an outcome as unlikely in the next 12 to 24 months. A rating pressure could emerge if Africa Re’s underwriting performance weakens materially below expectations or relative to peers, or if the credit quality of its investment portfolio slips below the ‘BBB’ threshold.
On the possibility of an upgrade, S&P said this remains remote in the near term. A future positive action would depend on a significant strengthening of Africa Re’s business risk profile, underpinned by higher revenues, stronger profits, and performance metrics comparable to reinsurers in the ‘A+’ category while still maintaining capital adequacy at the highest stress confidence level.
Reacting to the upgrade, Corneille Karekezi, group managing director and chief executive officer of Africa Re, described the rating upgrade as a landmark achievement for the corporation, especially as it approaches its 50th anniversary.
“The Board, management team and staff received this news with deep satisfaction and pride,” Karekezi said, adding “We are grateful to our cedants, brokers, shareholders, partners and stakeholders whose trust and loyalty have been instrumental to the Corporation’s growth. This milestone places Africa Re among a select group of indigenous reinsurers from developing and emerging economies to achieve such a rating.”
He added that the improved rating reinforces the maturity and credibility of the Africa Re brand as a dependably secure partner for insurers across Africa and beyond. According to him, the development expands the organisation’s ability to attract new partnerships aimed at addressing persistent protection gaps in Africa and providing innovative solutions to emerging risks, including cyber threats and climate-related exposures.
Africa Re also reiterated its commitment to supporting clients and stakeholders across the continent. The corporation stated that it views the rating upgrade as both recognition and responsibility, noting that it remains motivated to strengthen engagement with clients and deliver long-term value in reinsurance placements.
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