Strong balance sheet, strategic importance, and geographic diversification underpin confidence
AM Best has affirmed the Financial Strength Rating (FSR) of B+ (Good) and the Long-Term Issuer Credit Rating of “bbb-” (Good) for Continental Reinsurance Plc (CRe Nigeria), a wholly owned subsidiary of Continental Reinsurance Holdings Limited (CRe Botswana). The outlook for these ratings remains stable, reflecting the company’s strong financial foundation and strategic significance within the Continental Re group.
Key Drivers Behind the Ratings
The ratings reflect several strengths and considerations:
- Balance Sheet Strength: AM Best classifies CRe’s balance sheet as very strong, underpinned by robust risk-adjusted capitalisation. The company’s Best’s Capital Adequacy Ratio (BCAR) has consistently exceeded the strongest threshold between 2020 and 2024. While rapid business growth and recent Nigerian naira devaluations have caused some volatility, CRe has implemented enhanced capital management practices and is targeting more moderate growth moving forward.
- Operating Performance: CRe Nigeria’s profitability remains adequate despite inflationary pressures in key markets. In 2024, the reported return-on-equity (ROE) was 7.9% (2023: 24.6%). When adjusted for fair value movements and foreign exchange gains, the ROE improves to 44.6%, driven largely by a strong U.S. dollar position. Non-life underwriting performance has improved steadily since 2020, with net combined ratios in the mid-90s, reflecting ongoing portfolio remediation and economies of scale.
- Business Profile & Strategic Importance: CRe Nigeria consolidates all operating reinsurance subsidiaries of CRe and plays a central role in the group’s African operations. The company’s geographic diversification across more than 50 countries mitigates risks associated with economic, political, and financial volatility in its primary markets.
- Enterprise Risk Management: AM Best notes marginal enterprise risk management, with proactive steps taken to strengthen risk controls and optimize business growth.
Investment Strategy Enhances Credit Quality
Since 2023, CRe Nigeria has invested surplus assets offshore, particularly in U.S. Treasuries, improving overall credit quality. By mid-2025, offshore investments accounted for nearly 25% of total assets, up from 0% in 2022, providing greater stability against local currency fluctuations.
Growth and Outlook
CRe Nigeria has seen strong growth in local currency terms, with gross insurance revenue rising 120% to NGN 248 billion (USD 161 million) in 2024. AM Best expects a more measured growth strategy over the medium term, balancing expansion with risk management and market volatility considerations.
“The ratings reflect CRe Nigeria’s very strong balance sheet, adequate operating performance, strategic importance to the group, and partially mitigated exposure to economic and political risks in its main operating markets,” AM Best stated.
About AM Best
AM Best is a global credit rating agency and data analytics provider specializing in the insurance industry, with operations in over 100 countries. The company provides ratings, research, and performance assessments for insurers and financial institutions worldwide. For more information, visit www.ambest.com.
