Reinsurers in sub-Saharan Africa have maintained strong underwriting results and adequate pricing as market conditions moderate, according to a new report by AM Best.
In its Best’s Market Segment Report, titled “Sub-Saharan Africa’s Reinsurers Maintain Robust Performance Amid Moderating Market Conditions,” the credit rating agency said the region’s reinsurance sector has considerable potential for continued and profitable growth.
AM Best attributed the growth prospects to the region’s untapped natural resources, long-term economic growth outlook and increasing insurance penetration.
However, the agency noted that renewed geopolitical uncertainty, particularly the ongoing conflict in the Middle East, could cloud the sector’s positive outlook.
The extent of the impact on reinsurers is expected to vary according to their geographical exposure, with diversification identified as an important factor in mitigating the risks.
Naz Botea, senior financial analyst at AM Best and one of the report’s authors, said reinsurers rated by the agency were expected to remain resilient amid the changing risk environment.
Botea said their resilience was supported by capital buffers that had grown in recent years through strong internal capital generation, as well as increasing geographical diversification of investment assets and revenue.
The report’s findings come as reinsurers in the region continue to record strong underwriting results while maintaining rate adequacy despite moderating market conditions.
AM Best’s assessment points to further growth opportunities for the sub-Saharan African reinsurance sector, although geopolitical uncertainty remains a factor that could affect the market’s outlook.
