Over a period of 10 years, international investments remain continuous and regular, thus contributing to support the economies and in turn the insurance and reinsurance industry. This contribution has enabled the steady growth of reinsurance premiums, which have increased by a factor of 1.8 in ten years (2012-2021).
However, the capacity offered by local players remains low, despite the regular increase in the share capital of reinsurers. This situation is forcing local insurers to turn to foreign reinsurers to place part of their risks.
Read also | Global reinsurance market [4]
Reinsurance in Sub-Saharan Africa: premium evolution of AM Best rated reinsurers
In sub-Saharan Africa, the concentration of risks in certain large countries and the disparity in size between the various markets is likely to result in unreasonable risk accumulation, hindering the establishment of a homogeneous, balanced and diversified reinsurance market. This is especially true since some African countries have been subject to recurrent civil unrest with potential losses for reinsurers.
In addition to that, it is noteworthy to refer to the effects of global warming [5] with the occurrence of frequent and severe natural catastrophe [6] events, in particular floods and droughts.
As a recent example, terrible floods have affected the Kwazulu-Natal province in South Africa in April 2022, where in some areas more than 200 mm of rain was reported in 24 hours. This natural disaster, the worst ever recorded in the country, caused colossal damage estimated at hundreds of millions of dollars.
It should be noted that this same region has already sustained costly destruction following a wave of riots and looting in the summer of 2022.
Reinsurance in Sub-Saharan Africa: combined ratios 2014-2021
The combined ratios posted by local reinsurers show that over a long period of time the technical results remain good.
These results come largely from the main markets, namely South Africa, Nigeria and Kenya.
Reinsurance in Sub-Saharan Africa: return on equity: 2014-2021
In Sub-Saharan Africa, apart from 2021, returns on equity far overshadowed those achieved by reinsurers in other regions.
Despite its continued decline, return on investment remains relatively high, going from 15% in 2014 to nearly 7% in 2021.
