AM Best Affirms Credit Ratings of Ghana Reinsurance Company Limited

LONDON--(BUSINESS WIRE)--AM Best has affirmed the Financial Strength Rating of B (Fair) and the Long-Term Issuer Credit Rating of “bb” (Fair) of Ghana Reinsurance Company Limited (Ghana Re) (Ghana). The outlook of these Credit Ratings (ratings) is stable.

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

Ghana Re’s very strong balance sheet strength is underpinned by risk-adjusted capitalisation at the strongest level, as measured by Best’s Capital Adequacy Ratio (BCAR). Capital requirements are partly driven by a high level of asset risk due to the concentration of investments in Ghana. Prospectively, AM Best expects Ghana Re’s BCAR scores to remain at the strongest level, despite increasing underwriting risk reflecting ambitious growth plans.

Ghana Re has a track record of positive operating results, which are considered adequate when the high level of inflation in the company’s key markets is taken into account. Underwriting results have been volatile over the past 10 years, with underwriting losses reported in five years over the period 2011-2020. However, Ghana Re has reported technical profits in each of the past three years, despite non-life underwriting losses in 2019, which were offset by technical profits on the company’s life business. Whilst small, the company’s life reinsurance activity has been consistently profitable between 2016 and 2020.

Ghana Re maintains a good competitive position in Ghana as the largest domestic reinsurer and continues to expand its pan-African business. However, the company’s core markets are small by international standards, and business growth is dependent largely on initiatives to promote insurance penetration and the utilisation of local reinsurance capacity. Ghana Re’s business is concentrated by product and geography, although approximately half of the company’s gross written premium in 2020 was derived from African markets outside of Ghana.

Ghana Re is exposed to high levels of political, economic and financial system risk in the countries in which it operates (mainly Ghana and Kenya). The company’s risk management framework is evolving, and risk management capabilities are weak when compared with the company’s risk profile. AM Best expects ongoing improvement in the company’s risk management to support stable underwriting performance in the medium to long term.

This press release relates to Credit Ratings that have been published on AM Best’s website. For all rating information relating to the release and pertinent disclosures, including details of the office responsible for issuing each of the individual ratings referenced in this release, please see AM Best’s Recent Rating Activity web page. For additional information regarding the use and limitations of Credit Rating opinions, please view Guide to Best’s Credit Ratings. For information on the proper use of Best’s Credit Ratings, Best’s Preliminary Credit Assessments and AM Best press releases, please view Guide to Proper Use of Best’s Ratings & Assessments.

AM Best is a global credit rating agency, news publisher and data analytics provider specialising in the insurance industry. Headquartered in the United States, the company does business in over 100 countries with regional offices in London, Amsterdam, Dubai, Hong Kong, Singapore and Mexico City. For more information, visit www.ambest.com.

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