Press Release - JANUARY 30, 2020

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 its risk-adjusted capitalisation, which was at the strongest level at year-end 2018, as measured by Best’s Capital Adequacy Ratio (BCAR), supported by low underwriting leverage and a comprehensive retrocession programme. The introduction of compulsory cessions to CICA Re on direct insurance business in the Conférence Interafricaine des Marchés d’Assurances (CIMA) region in 2020 will result in a significant increase in the company’s underwriting risks, with net written premium expected to double in the short term. However, CICA Re benefits from good financial flexibility, with shareholders having demonstrated their commitment via capital injections in the past, and AM Best expects CICA Re’s risk-adjusted capitalisation to remain at the strongest level, supported by adequate capital increases and good earnings retention. 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.

CICA Re has a track record of adequate operating performance, with a five-year (2014-2018) weighted average operating ratio of 88.5%, supported by good underwriting results and stable investment income. The company reported a net profit of CFAF 4.6 billion (USD 8.0 million) in 2018, up from CFAF 4.1 billion (USD 7.5 million) in the previous year, driven by higher life insurance margins. AM Best expects net earnings to increase from 2020 onward, as a result of the amendment to the compulsory cessions, provided the underlying profitability of insurance markets in the CIMA region remains good.

CICA Re maintains a good market position within the CIMA region, where it has benefited from legal compulsory cessions on reinsurance for years. In addition, the company also has a portfolio of open-market business originated from across Africa, Asia and the Middle East, which AM Best expects to account for approximately half of total premium going forward. Whilst the introduction of compulsory cessions on direct insurance in 2020 enhances CICA Re’s profile in the region, the business profile assessment remains constrained by the company’s modest scale by international standards, owing to the small size of the CIMA zone, and its role as a largely following reinsurer.

Despite some developments over the past two years, AM Best considers CICA Re’s risk management framework to remain at an early stage of development, with further progress needed to embed it across 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 Guide to 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 credit rating agency, news publisher and data analytics provider specializing in the insurance industry. Headquartered in the United States, the company does business in over 100 countries with regional offices in New York, London, Amsterdam, Dubai, Hong Kong, Singapore and Mexico City.

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AMB# Company Name
093852 CICA Re