AM Best has affirmed the Financial Strength Rating of B (Fair) and the Long-Term Issuer Credit Rating of “bb+” (Fair) of East Africa Reinsurance Company Limited (EARe) (Kenya). The outlook of these Credit Ratings (ratings) is stable.

The ratings reflect EARe’s balance sheet strength, which AM Best assesses as very strong, as well as its adequate operating performance, limited business profile and marginal enterprise risk management.

EARe’s balance sheet strength is underpinned by its risk-adjusted capitalisation, as measured by Best’s Capital Adequacy Ratio (BCAR), which was comfortably at the strongest level at year-end 2024. AM Best expects EARe to maintain healthy capital buffers in excess of the strongest threshold, benefitting from its low underwriting leverage and the ongoing derisking of its investment portfolio. An offsetting rating factor is EARe’s exposure to the very high levels of political risk and the high levels of economic and financial system risks in Kenya, where the company is domiciled and over 80% of its invested assets are located. Nevertheless, the company is executing remedial actions to derisk its investment portfolio, including the reinvestment of assets abroad into developed market bonds of high credit quality.

EARe has a track record of adequate operating performance, with return-on-equity ratios moderately exceeding inflation rates in Kenya over the past five years. Prudent underwriting has supported improved underwriting performance in recent years, with the company reporting a net/net combined ratio of 96.2% in 2024, representing its third consecutive year of sub-100% combined ratios. Investment income is expected to remain the primary contributor toward overall earnings, reflecting the favourable interest rates offered by domestic issuers in Kenya.

EARe is a small reinsurer by global standards, with insurance service revenue of USD 50 million in 2024. The company has a geographically diverse portfolio mix across Africa, though premium volumes are derived primarily from East African markets.

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