Despite recent capital growth, Sub-Saharan Africa’s reinsurers continue to rely on international partners to meet local insurance demand, with AM Best reporting that regional capacity remains insufficient to cover complex risks such as property and energy exposures.
In its Market Segment Report: Sub-Saharan Africa’s Reinsurers – Staying the Course Amid Economic Uncertainty, AM Best said capacity offered by Africa-domiciled reinsurers remains low and unable to fully meet the needs of primary markets. As local economies industrialize, insurance requirements have grown faster than the region’s ability to retain risk. Many reinsurers continue to depend on retrocession arrangements and technical expertise from larger global players.
Although local reinsurers have posted steady capital growth, overall retention ratios have declined. AM Best noted that smaller, privately owned firms compete with national and supranational entities, while global reinsurers provide critical support for underwriting complex or high-value risks.
Sub-Saharan reinsurers reported another year of solid underwriting profitability, benefiting from pricing adjustments on loss-affected lines and tighter risk selection. Together with higher regional interest rates, this helped deliver a second consecutive year of double-digit return on equity (ROE). Over the past decade, the weighted average ROE for rated reinsurers has remained above 10%, even when adjusted for inflation.
AM Best observed that underwriting performance has improved since combined ratios peaked in 2019. Pricing actions in markets such as Kenya and adherence to minimum rate regulations supported these gains, though enforcement varies by country. Despite the high cost of operations and limited economies of scale, most reinsurers have maintained profitable results over the past decade.
Natural catastrophe activity across the continent has also influenced market dynamics. Gallagher Re estimated that Africa recorded $9 billion in economic losses in 2024, compared with a 10-year average of $6 billion. Major events included Cyclones Chido and Freddy and the Morocco earthquake. AM Best said reinsurers’ exposures to these events remained within acceptable levels due to the wide protection gap between insured and economic losses.
The report also found that inflation across the region fell to a median of 4.5% in 2024 from 7.1% in 2023. The International Monetary Fund projects Sub-Saharan Africa’s real GDP to grow by 3.8% in 2025, following an average of 2.7% between 2020 and 2024.
Over time, AM Best expects reinsurers with prudent risk management and diversification strategies to withstand macroeconomic pressures and contribute to the region’s long-term insurance development.
Do you think local reinsurers can build sufficient capacity to reduce their reliance on global players?
