Africa Re, a profitable company

Atlas Magazine is publishing the subsequent part of the special report "Africa Re: a success story." This section highlights the main technical indicators of the African reinsurer since its inception.

As at 31.12.2014, Africa Re is:

  • a turnover of 718 million USD
  • a paid-up capital of 294 million USD
  • a shareholders’ equity of 737 million USD
  • 236 staff members
  • a network of six regional offices, two subsidiaries and one local office(1)
  • a rating of A- with positive outlook granted by A.M. Best and A- with stable outlook by Standard & Poor’s
  • the leading African reinsurer(2)

Africa Re, evolution of turnover (1978(3) -2015)

in millions USD  africa re turnover

Despite an environment characterized by economic recession, recurrent civil wars and a strong depreciation of African currencies versus the US dollar, Africa Re has managed to report sustained growth of its turnover since its inception.

Addis-Ababa whrere Africa Re opened an office in 2011© VBzi , CC BY 2.0

The decline in the 2005 turnover was accounted for by a change in the accounting method. In the course of the mentioned year, Africa Re gave up the Lloyd’s triennial accounting system to turn to the one provided for by the IFRS standard which is annual.

economic recession, recurrent civil wars and a strong depreciation of African currencies versus the US dollar, Africa Re has managed to report sustained growth of its turnover since its inception.

The decline in the 2005 turnover was accounted for by a change in the accounting method. In the course of the mentioned year, Africa Re gave up the Lloyd’s triennial accounting system to turn to the one provided for by the IFRS standard which is annual.

In 2015, the volume of written premiums sustains for the second time ever since the establishment of the company a slight decrease, going from 717.5 million USD in 2014 down to 689.3 million USD at the end of 2015, a decrease of 3.9%.

This decline is accounted for by the considerable erosion in 2014 of some African currencies against the US dollar. That is the case of South African currency, the Rand, which saw its value depreciated by 33% in a year, the Algerian Dinar (-22%) and the Nigerian Naira (-9%).
Below is the evolution trend of main currencies in the African markets versus the US dollar.

Evolution of African currencies against the US dollar

CountryCurrency1978*19902000201020142015Variation rate 1978-2015
DZD1$=3.9 DZD1$=7.8 DZD1$=75.9 DZD1$=75.8 DZD1$=88.3 DZD1$=107.6 DZD-2659%
South Africa
ZAR1$=0.9 ZAR1$=2.6 ZAR1$=7.6 ZAR1$=6.6 ZAR1$=11.6 ZAR1$=15.4 ZAR-1611.1%
AON1$=6.04 AON1$=6.04 AON1$=6 AON1$=92.9 AON1$=102.9 AON1$=136 AON-2151.6%
EGP1$=0.4 EGP1$=1.4 EGP1$=3.9 EGP1$=5.8 EGP1$=7.2 EGP1$=7.8 EGP-1850%
ETB1$=2.1 ETB1$=1.8 ETB1$=8.2 ETB1$=16.8 ETB1$=20.4 ETB1$=21.4 ETB-919%
KES1$=7.7 KES1$=20.1 KES1$=78.1 KES1$=83.3 KES1$=92.3 KES1$=104.2 KES-1253%
LYD1$=0.3 LYD1$=0.2 LYD1$=0.5 LYD1$=1.3 LYD1$=1.2 LYD1$=1.4 LYD-366.6%
MAD1$=4.5 MAD1$=7.2 MAD1$=10.5 MAD1$=8.5 MAD1$=9 MAD1$=9.9 MAD-120%
NGN1$=0.6 NGN1$=7 NGN1$=110.5 NGN1$=153.3 NGN1$=184.2 NGN1$=201.4 NGN-33466.6%
TND1$=0.4 TND1$=0.8 TND1$=1.4 TND1$=1.5 TND1$=1.9 TND1$=2 TND-400%
XOF1$=225.6 XOF1$=238.7 XOF1$=699.3 XOF1$=504.7 XOF1$=539.6 XOF1$=600.3 XOF-166%
* Publication date of the first balance sheet of Africa Re

Africa Re, shareholders’ equity: 1976-2014

in millions USD africa re shareholder's equity Source: Atlas Magazine

Africa Re, paid-up capital: 1976-2014

in millions USD  africa re paid up capital * Paid-up capital: 4 600 000 USD, authorized capital: 15 000 000 USD, subscribed capital: 10 000 000 USD Source: Atlas Magazine

From 2000 to 2015, Africa Re’s shareholders' equity went fifteen fold, rising from 50 million USD to 737 million USD. This growth rate of shareholder’s equity is clearly above that of the premiums which went approximately nine fold.

While shareholders' equity went fifteen fold during the period considered, The paid-up capital rose from 24 million USD to 294 million USD, that is, twelve times as much as the initial period.

This gap between the increase in shareholders' equity and share capital showcases some consolidation concern regarding the company’s financial bases at the detriment of a policy for the allocation of dividends to shareholders.

Shareholders' equity consolidation has been carried out on two fronts: the increase of share capital and the establishment of substantial reserves from the profits generated.

Africa Re, net result: 2000-2014

in millions USD africa re net result Source: Atlas Magazine

In 2014, Africa Re’s net profits exceeded the symbolic threshold of 100 million USD to be set at 119 million USD, a 16.08% return on equity in one year. This rate is deemed to be excessively high given the current context of reinsurance worldwide.

Starting from 2009, the net profits marked a substantial upward trend: +48% in 2010, +35% in 2012, +40% in 2014.

During the recent 15 years (from 2000 to 2014), the total profits generated 606 million USD, approximately twice as much as the current paid up capital.

Profit allocation policy

As mentioned above, Africa Re has favoured the consolidation of shareholders' equity at the detriment of the dividend allocation policy.

In 2014, only 16.15 million USD were allocated to shareholders, that is, nearly 14% of the profits generated. With roughly 15.5% of the allocation in dividends, the year 2013, was in line with 2014.
The same scenario played out in 2012 with an allocation of 14% of profits.

Africa Re, premimus per region

Evolution of premiums per region: 2000-2014

in millions USD africa re turnover Source: Atlas Magazine

Focused upon inception on three main zones, the Maghreb, East Africa and West Africa, underwriting has gradually shifted toward Austral Africa, which in 2004 and in 2005, accounted, alone, for nearly half the written premiums (49%).

Since that date, some readjustment has been carried out, reducing year after year the share of the premiums written in the southern cone of Africa, particularly in South Africa.

This adjustment has benefited English-speaking Eastern Africa and Western Africa that were progressing slowly. Kenya, on one side, and Nigeria, on the other side, stand as the future hubs of the African reinsurance industry.

Breakdown of premiums per region in 2014

Premiums in millions USD africa re premiums region

Total premiums in 2014: 718 million USD

In 2014, Austral Africa still remained at the top of the underwriting zones with 29% of the company's total turnover. English speaking Eastern and Southern Africa came second and third with 22% and 15% respectively. International business and in the islands of the Indian Ocean were lagging behind with 3% and 2% of the global premiums' volume.

Africa Re, premiums per class of business

Evolution of premiums per class of business: 2000-2014

in millions USD africa re premiums class of business Source: Atlas Magazine

The graph above showcases a considerable gap between two groups of risks: damage to property and motor on the one hand, and marine, energy and life risks on the other. The first group ranks high on the standings with 75% of the portfolio, followed well behind by the other risks.

In fact, Africa Re has built its portfolio around traditional risks; motor and fire classes of business for which it is endowed with know-how and enough capacity. The pan African reinsurer has a large margin of progression in energy and marine which require a particular technical know-how and a huge underwriting capacity. The last two classes have been reinsured in specialized markets such as that of the Lloyd’s.

Starting from 2007, the statistics posted by Africa Re separately pointed out the fire and engineering risks on the one hand, and accident and motor risks on the other.

Africa Re, evolution of fire & engineering and accident & motor premiums: 2007-2014

 Fire & EngineeringAccident & MotorTotal

Africa Re’s portfolio has for a long time been dominated by the fire-engineering class of business. The motor business is only second. The combined share of both classes of business during the 2000-2014 period is of 73.6%, a percentage that climbed to 80% in 2004.

Breakdown of premiums per class of business in 2014

Premiums in millions USD africa re premiums class of business

Total premiums in 2014: 718 million USD

Source: Atlas Magazine

In 2014, fire and motor insurance were pulling premium collections with respective shares of 39.22% and 31.59% of the turnover.

These classes are well ahead of marine transport-aviation risks, oil, energy and life risks.

Loss ratio per region

Africa Re, average loss ratios per region: 2000-2014(4)

RegionAverage loss ratios per region
French speaking West and Central Africa
34.82 %
English speaking West Africa
46.24 %
East Africa
46.66 %
African Islands of the Indian Ocean
47.30 %
47.99 %
North East Africa
56.93 %
Austral Africa
64.10 %
International business
66.72 %
Average loss ratio of Africa Re
54.17 %

It is with international business and in Austral Africa that the average loss ratio of the 2000-2014 period is highest.

It is worth noting that the average loss ratio of the previously mentioned two zones is nearly double that of French-speaking Western Africa which detains the lowest ratio (34.82%).

English-speaking Western Africa has also had an excellent performance, and likewise for Eastern Africa, the African islands of the Indian Ocean and the Maghreb.

Loss ratio per classes of business

Africa Re, average loss ratios per non life insurance: 2000-2014(5)

Class of businessAverage loss ratios per class of business
Fire & Accident60.4%
Oil & Energy*44.57%
Marine & Aviation47.76%

It is in the least developed classes of business that the lowest average loss ratio is reported. Not surprisingly, fire and motor are the most affected classes of business with an average loss ratio of 60.40% over 15 years. Despite this figure, Africa Re’s underwriting margin remains adequate in these two classes.

*Classification introduced as from 2003

Management expenses

Africa Re, evolution of management expenses: 2000-2014 (6)

YearOverhead expenses/Gross written premiumsAcquisition costs/Gross written premiumsManagement expenses ratio *
20005.80%31.79%37.59 %
* Calculated as follows: (Overhead expenses/Gross written premiums + Acquisition costs/Gross written premiums) Source: Atlas Magazine

Management expenses include overheads or administrative costs and acquisition costs or commissions disbursed to obtain business.

Overhead or administrative costs

Contained for so long under 5%, overhead costs have sustained an increase in 2013 and 2014, the years during which they climbed to 5.10% and 5.6% respectively of the written premiums. This rate was poised to continue its increase in 2015 because of the declining turnover.

By way of comparison, in 2014, SCOR, the world’s fifth reinsurer, posted a management expenses rate of 4.98%, and Hannover Re, a reference in the field, exhibited a rate of 2.58%.

Acquisition costs or commissions disbursed

It is by lowering its acquisition rate that Africa Re may consolidate in the future its combined ratio at its current level.

African direct markets are dominated by brokers who withhold high commission rates at source. This situation strains Africa Re in comparison with its international competitors.

In Africa, proportional reinsurance is still important. The high business acquisition cost by direct insurers has impacted the proportional treaties and facultative business underwritten by Africa Re.

In 2014, Africa Re’s acquisition rate was at 25.2% whereas the one of its international competitors, whose portfolios include many non-proportional treaties, was around 20%.

Combined ratios

Africa Re, evolution of gross combined ratios: 2000-2014 (7)

YearGross combined ratios
Source: Atlas Magazine

With 97.56%, the year 2005 reported the highest combined ratio. Ever since, this ratio has notably gone down ending up for the first time since the establishment of the company under the rate of 80% in 2014.

These accomplishments are accounted for by extremely low loss experience rates, especially in the West African zone where an average loss experience of 34.82% has been reported during the recent 15 years. French-speaking West Africa and East Africa have also reported a rate below 50% in the course of the same period.

Premium retention rate: 2000-2014

in millions USD
YearUnderwritten premiumsRetained premiums%
Source: Atlas Magazine

In spite of a slight decrease in the retention rate in 2013 and 2014 in comparison with 2012, Africa Re has retained on average between 85% and 90% of the business underwritten, with the remaining share being ceded. In fact, retrocession rate depends on the composition of the portfolio. The more major risks such as energy and aviation contained in the portfolio, the higher the retrocession.

On the contrary, a portfolio, essentially composed of simple risks such as the personal line ones (motor, health, etc), usually yields a poor retrocession.

The level of retention, the kind of retrocession program and the cost of retrocession on the international market are also decisive factors in terms of the premium retention level.

Africa Re's Management

1977-1984 period

Edward MensahGeneral managerGhana
Kabisi MilangaAssistant general managerDR of Congo
Nabil MoharebSecretary generalEgypt

1984-1993 period

Eyessus Work ZafuGeneral managerEthiopia
El Noman El SanusiAssistant general managerSoudan
Bakary KamaraSecrétaire généralMauritania

1993-2011 period

Bakary KamaraGeneral managerMauritania
James AbbanAssistant general manager (1994 - 1999)Ghana
Haile Michael KumsaAssistant general manager (1999 - 2010)Ethiopie
Ganiyu MusaAssistant general manager (2006 -2011)Nigeria

July 2011 to-date

Corneille KarekeziGeneral managerRwanda
K.E.N. AghoghovbiaAssistant general managerNigeria

Performance of Africa Re compared to the other reinsurers

Figures as at 31.12.2014 in USD
CompanyShare capitalTurnoverShareholders’ equityNet result after taxROE
Africa Re
293 731 000717 525 000736 925 000118 504 00016.08%
Munich Reinsurance Co. of Africa
3 009 300485 571 000237 619 50025 927 50010.91%
Société Centrale de Réassurance
166 382 000299 897 550242 660 07535 207 86314.51%
Hannover Reinsurance Africa
6 273 000265 315 66064 820 000956 1001.48%
Compagnie Centrale de Réassurance
217 360 000255 169 200269 640 80031 826 08011.80%
Kenya Re
19 651 10012 9932 100224 503 50035 230 40015.69%
RGA Reinsurance Company of South Africa
4 480 000125 454 00013 525 0001 791 00013.24%
Continental Re
28 655 00090 813 00081 639 5004 727 4275.79%
SCOR Africa
12 928 50081 395 25020 595 0001 657 6928.05%
Tunis Re
51 101 00049 892 20171 508 4125 974 0918.35%
Middle East
Saudi Re
266 530 000148 268 000217 868 0002 889 0001.33%
Kuwait Re
51 304 800117 021 000136 898 000-185 422-
Arab Re
75 000 00081 647 63692 586 948564 8790.61%
Gulf Re
200 000 00055 316 000180 316 000-27 326 000-
Takaful Re
125 000 00018 429 00082 310 000-8 941 000-
Munich Re
714 426 00059 322 744 00036 838 000 0003 854 763 00010.46%
Swiss Re
37 468 00033 276 000 00035 930 000 0003 500 000 0009.74%
Hannover Re
146 601 49417 458 635 00010 032 546 0001 198 125 00011.94%
Berkshire Hathaway
78 313 000194 673 000 000243 027 000 000883 000 0000.36%
1 845 326 00013 756 069 0006 964 344 000622 402 0008.94%
Source: Renewal 2016, reinsurance directory, Atlas Magazine


Atlas Magazine provides you with detailed appendices on the activities of Africa Re. To directly access the required information, please click on the appendix title mentioned in the list below.

Appendix I

Appendix II

Appendix III

Appendix IV

Appendix V

Appendix VI

Appendix VII

(1) See details in appendix I
(2) See Renewal 2016, reinsurance directory, Atlas Magazine
(3) Publication date of the first balance sheet of Africa Re
(4) See details in Appendix V
(5) See details in Appendix VI
(6) See details in Appendix VII
(7) See details in Appendix VII
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