AM Best has assigned a Financial Strength Rating of B+ (Good) and a Long Term Issuer Credit Rating of ‘bbb-’ to WAICA Reinsurance Corporation PLC (WAICA Re, Sierra Leone). The outlook assigned to these Credit Ratings is stable.
The ratings reflect WAICA Re’s balance sheet strength, which AM Best categorises as very strong, as well as its strong operating performance, limited business profile and marginal enterprise risk management.
WAICA Re’s balance sheet strength is underpinned by the strongest level of risk-adjusted capitalisation, as measured by Best’s Capital Adequacy Ratio. The assessment considers the company’s conservative investment strategy, with the majority of the portfolio held as cash and deposits; and a low level of retrocession dependence. A partially offsetting factor is the company’s exposure to the significant economic, political and financial system risks associated with the countries where WAICA Re operates, which include Nigeria, Ghana and Sierra Leone.
WAICA Re has a track-record of strong operating performance, demonstrated by a five-year (2015-2019) weighted average combined ratio and return on equity of 87.0% and 9.5%, respectively. Prospective earnings are expected to remain strong, underpinned by solid technical performance and complemented by positive, albeit modest, investment returns, reflecting the low-yielding assets in which the company primarily invests.
AM Best considers WAICE Re’s business profile to be limited, owing to its relatively small size and geographic concentration of business in Nigeria and Ghana. The company reported gross written premium of US$64.5million in 2019. While AM Best expects WAICA Re to grow its premium base gradually through diversification into other markets, business will continue to originate primarily from Nigeria and Ghana.
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 is in over 100 countries – with regional offices in New York, London, Amsterdam, Dubai, Hong Kong, Singapore and Mexico City.