Nigeria: AM Best confirms credit ratings of African Reinsurance Corporation

AM Best confirmed the excellent “A” financial strength rating and long-term credit rating of the issuer “A” of the reinsurance company African Reinsurance Corporation (ARC) (Nigeria). The outlook for these credit ratings is stable.

The ratings reflect the strength of ARC’s balance sheet, which AM Best ranks as the strongest, as well as its strong operational performance, favorable business profile and appropriate enterprise risk management (ERM). The agency believes that “ARC’s balance sheet strength is based on its highest risk-adjusted capitalization, as measured by Best’s capital adequacy ratio (BCAR).”

ARC’s capital position is expected to remain stable thanks to strong earnings retention, prudent investment allocation and low underwriting leverage. The company is expected to bear the economic, political and financial risks associated with operating in the African region, but will address them through its strategy of geographic diversification and prudent asset management.

ARC demonstrated a strong performance in non-life underwriting, posting a five-year weighted average combined ratio (2015-2019) of 94.2%. However, underwriting results deteriorated in 2018 and 2019, with combined non-life ratios of 97.9% and 97.4%, respectively.

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