AM Best has affirmed the financial strength rating of B (Fair) and the long-term issuer credit rating of “bb+” (Fair) for Tanzania Reinsurance Company Ltd. (TAN RE), headquartered in Tanzania. The outlook for these credit ratings is stable.
The affirmed ratings reflect TAN RE’s balance sheet strength, which AM Best assesses as very strong, alongside its strong operating performance, limited business profile, and marginal enterprise risk management.
AM Best says that TAN RE’s balance sheet strength is supported by risk-adjusted capitalization that surpasses the minimum threshold for the strongest assessment level. The company’s capitalization benefits from low underwriting leverage.
While TAN RE relies moderately on retrocession coverage to manage large-risk exposure and bolster its underwriting capacity, the credit risk associated with this reliance is partially mitigated by a retrocession panel with sound financial stability.
The rating also factors in TAN RE’s exposure to elevated economic, political, and financial system risks within Tanzania, where the reinsurer is domiciled, conducts the majority of its business, and holds most of its assets.
Historically, AM Best noted that TAN RE has demonstrated strong operating performance, evidenced by a return-on-equity ratio exceeding 10% annually over the past five years. The company’s results are bolstered by its non-life underwriting profitability, reflected in a net combined ratio of 90% in 2023, compared to 92% in 2022. Operating earnings are further supported by moderate investment returns.
TAN RE is a relatively small composite reinsurer on a global scale, with reinsurance service revenue reaching $83 million in 2023. The company’s business operations are heavily concentrated within Tanzania, where it benefits from preferential market access, including mandatory cessions on reinsurance business ceded by local insurers.
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