Press Release - FEBRUARY 09, 2017

A.M. Best Affirms Credit Ratings of Compagnie Commune de Réassurance des Etats Membres de la CIMA

 Charlotte Vigier
Senior Financial Analyst
+44 20 7397 0270

Ghislain Le Cam, CFA, FRM
Associate 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


A.M. 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 modest business profile, good operating performance and strong risk-adjusted capitalisation. Offsetting rating factors include the company’s weak but developing enterprise risk management (ERM) framework and significant exposure to economic and financial risks emanating from its operations in the Conférence Interafricaine des Marchés d’Assurances (CIMA) region.

CICA Re has a good niche market position as the beneficiary of legal compulsory cessions in the CIMA region. Over the past 26 years, the company has also developed open market business regionally and in other territories, including sub-Saharan Africa, the Middle East and Asia. Open market business accounted for three quarters of the CFAF 33.2 billion (USD 55.4 million) gross written premium (GWP) reported by the company in 2015. The increasing reinsurance demand in the CIMA region and the company’s efforts to expand internationally to improve geographical diversification have resulted in GWP growing by a compound annual growth rate of 14.3% between 2011 and 2015. CICA Re is expected to report premium income of around CFAF 40 billion (USD 64.3 million) for 2016. However, the company’s overall profile remains modest, owing to the small size of the CIMA zone and to the company providing following capacity in the global reinsurance market.

CICA Re has a track record of good operating profitability with a five-year (2011-2015) weighted average operating ratio of 87.8%, supported by solid albeit volatile results from the non-life portfolio and stable results emanating from its smaller life portfolio. The company reported a net profit of CFAF 3.2 billion (USD 5.4 million) in 2015, up from CFAF 2.7 billion (USD 4.9 million) the previous year, driven by higher life margins and investment income, and 2016 net profit is expected to benefit further from an improved claims experience. Prospective performance is expected to remain positive although subject to potential volatility as CICA Re continues its expansion in territories where it has less underwriting expertise, whilst domestically the company remains exposed to high economic and financial risks prevailing in the CIMA region.

CICA Re’s risk-adjusted capitalisation is strong, supported by low underwriting leverage and a solid retrocession panel. Good earnings retention has enabled the company to build up its capital and surplus considerably from CFAF 21.9 billion (USD 44.0 million) at year-end 2011 to CFAF 36.8 billion (USD 61.4 million) at year-end 2015. Despite the decision taken in 2014 to increase the dividend pay-out ratio to a range of 25% to 50%, A.M. Best expects the company to continue generating sufficient internal capital to fund its prospective strategic initiatives.

CICA Re’s ERM framework is currently deemed underdeveloped relative to its risk profile, especially considering the company’s exposure to a high level of economic and financial system risk associated with its profile in Africa. To date, the ERM function has been mostly reactive, focusing on identifying risks and developing the control environment after incidents have occurred. However, risk management capability is expected to improve prospectively following the appointment of a dedicated head of risk management in 2016.

This press release relates to Credit Ratings that have been published on A.M. 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 A.M. 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.

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AMB# Company Name
093852 CICA Re