AM Best has affirmed the Financial Strength Rating of B+ (Good) and the Long-Term Issuer Credit Rating of “bbb-” (Good) of Compagnie Commune de Réassurance des Etats Membres de la CIMA (CICA-RE) (Togo). The outlook of these Credit Ratings (ratings) is stable.

The ratings reflect CICA-RE’s balance sheet strength, which AM Best assesses as very strong, as well as its adequate operating performance, neutral business profile and marginal enterprise risk management.

CICA-RE’s balance sheet strength is underpinned by its risk-adjusted capitalisation, which is expected to remain at the strongest level at year-end 2024, as measured by Best’s Capital Adequacy Ratio (BCAR). AM Best expects CICA-RE’s risk-adjusted capitalisation to remain comfortably above the minimum required for the strongest assessment prospectively, with organic capital generation sufficient to support the company’s strategic growth plans. CICA-RE’s balance sheet strength assessment also factors in its good financial flexibility, demonstrated through successful capital raises from existing and new shareholders in recent years, which have led to paid-up capital reaching XOF 60 billion (USD 101 million) at year-end 2023. CICA-RE holds a well-diversified investment portfolio by asset type and country; however, assets are concentrated in the Conférence Interafricaine des Marchés d’Assurances (CIMA) region, which exposes the company’s balance sheet to elevated economic, political and financial risks.

CICA-RE has a track record of adequate operating performance, demonstrated by a five-year (2019-2023) weighted average return-on-equity of 9%. Over this period, the company has reported a robust technical performance, underpinned by healthy underwriting profits from the non-life segment, evidenced by a five-year weighted average combined ratio of 92% (as calculated by AM Best), complemented by positive contributions from the life segment. CICA Re’s results have been enhanced by good investment income, highlighted by a five-year weighted average net investment return (including unrealised gains/losses) of 5%. AM Best expects continued robust underwriting performance prospectively, supported by the good underlying profitability of the insurance markets in the CIMA region.

CICA-RE’s neutral business profile assessment reflects its strong market position in the CIMA region, where the reinsurer benefits from compulsory cessions on reinsurance and direct insurance businesses, as well as established direct relationships with local cedants. CICA-RE’s gross written premiums (GWP) have grown strongly in recent years, with a five-year weighted average GWP growth rate of 17%. This was supported by revisions to the legal cessions’ structure in the CIMA region in 2020, and the company’s focus on regional and international expansions. In 2023, the company generated 50% of its GWP from the CIMA region, including legal cession businesses, with the remaining conventional open-market business originating from Africa, Asia, the Middle East and Latin America. The assessment considers CICA-RE’s good diversification by lines of business and product type, as well as its small size by global standards, with GWP of XOF 118 billion (USD 198 million) in 2023.

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