Press Release - JANUARY 31, 2019

AM Best Affirms Credit Ratings of CICA Re

 Charlotte Vigier
Senior Financial Analyst
+44 20 7397 0270

Ghislain Le Cam, CFA, FRM
Director, Analytics
+44 20 7397 0268

Christopher Sharkey
Manager, Public Relations
+1 908 439 2200, ext. 5159

Jim Peavy
Director, Public Relations
+1 908 439 2200, ext. 5644


AM Best has affirmed the Financial Strength Rating of B (Fair) and the Long-Term Issuer Credit Rating of “bb+” of Compagnie Commune de Réassurance des Etats Membres de la Conférence Interafricaine des Marchés d’Assurances (CICA Re) (Togo). The outlook of these Credit Ratings (ratings) remains stable.

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

CICA Re’s balance sheet strength is underpinned by risk-adjusted capitalisation that is comfortably at the strongest level, as measured by Best’s Capital Adequacy Ratio, and is supported by low underwriting leverage, a comprehensive retrocession programme and stable organic capital generation over recent years. CICA Re also benefits from good financial flexibility, with shareholders that have increased paid-up capital several times in recent years to support the company’s development. Offsetting factors include the high levels of receivables on the balance sheet and the limited quality and diversification of assets, which have the potential to introduce volatility to the company’s solvency position.

The introduction of compulsory cessions to CICA Re on direct non-life and life insurance business in the Conférence Interafricaine des Marchés d’Assurances (CIMA) region, planned for 2020, is likely to result in a significant increase in the company’s underwriting risks, with net written premium forecast to double as a result. However, AM Best expects CICA Re’s risk-adjusted capitalisation to remain at the strongest level, supported by further growth in its capital base.

CICA Re has a track record of adequate operating performance, with a five-year (2013-2017) weighted average operating ratio of 88.2%, supported by good underwriting results and stable investment income. The company reported a net profit of CFAF 4.1 billion (USD 6.9 million) in 2017, up from CFAF 3.8 billion (USD 6.1 million) in the previous year, driven by higher life insurance margins. Prospective profitability, while expected to be good, could be subject to volatility due to the company’s exposure to emerging countries and its expansion into new markets.

CICA Re maintains a good market position within the CIMA region, where it benefits from legal compulsory cessions on reinsurance business. In addition to compulsory business, the company also has a portfolio of open-market business, which accounted for over 80% of total gross written premium (GWP) in 2017, originated from across Africa and the Middle East. The expected compulsory cessions on direct insurance should enhance CICA Re’s profile in the region. However, the company’s business profile assessment is anticipated to remain constrained by CICA Re’s modest global scale, owing to the small size of the CIMA zone and its role as a largely following reinsurer.

Despite developments made over the past two years, CICA Re’s risk management framework is considered to be at an early stage of development, with further progress needed to embed it in the company.

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 Understanding Best’s Credit Ratings. For information on the proper media use of Best’s Credit Ratings and AM Best press releases, please view Guide for Media - Proper Use of Best’s Credit Ratings and AM Best Rating Action Press Releases.

AM Best is a global rating agency and information provider with a unique focus on the insurance industry.

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AMB# Company Name
093852 CICA Re