AM Best has affirmed the financial strength rating of B (Fair) and the long-term issuer credit rating of “bb+” (Fair) for Kenya Reinsurance Corporation Limited (Kenya Re), with a stable outlook for both ratings.
The ratings reflect Kenya Re’s balance sheet strength, which AM Best assesses as very strong. The company’s risk-adjusted capitalization remains at the strongest level. However, about one-third of Kenya Re’s investment portfolio consists of illiquid assets such as private equity and real estate, which is a key factor in capital consumption.
Kenya Re’s ratings were previously reaffirmed following a 10% decline in after-tax profits for the first half of 2024, with earnings totaling KSh 1.06 billion, down from KSh 1.17 billion in the same period of 2023.
AM Best considers Kenya Re’s operating performance to be adequate. The company’s return-on-equity ratio has moderately outpaced inflation in Kenya over the past five years. Since 2020, after implementing corrective measures, the non-life portfolio has shown technical profits in most years.
The net/net combined ratio improved to 78.1% for 2024, compared to 97.7% in 2023, based on AM Best’s calculations using IFRS 17. Investment income, supported by high interest rates in Kenya, continues to be a primary driver of overall earnings.
Kenya Re operates as a composite reinsurer with a portfolio diversified by line of business across Africa, Asia, and the Middle East. The company benefits from mandatory cessions from domestic insurers, giving it privileged access to the Kenyan market.
Sub-Saharan Africa’s reinsurers, including Kenya Re, continue to rely on international partners to meet local insurance demand, as regional capacity remains insufficient to cover complex risks such as property and energy exposures.
While local reinsurers have posted steady capital growth, overall retention ratios have declined, and many depend on retrocession arrangements and technical expertise from larger global players.
AM Best describes Kenya Re’s risk management framework as evolving, with risk management capabilities considered weak relative to its risk profile.
In September, the company’s managing director was suspended due to an ongoing internal matter. “AM Best will continue to monitor the outcome of this matter,” the rating agency stated.
In a related development, Africa Specialty Risks (ASR) has partnered with the Nairobi International Financial Centre Authority to support a US$2 billion de-risking initiative aimed at stabilizing foreign investment into Kenya. This agreement is expected to reduce the cost of capital, accelerate project timelines, and enhance investor confidence in the country.
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