Corneille Karekezi, group managing director and CEO of African Reinsurance Corp (Africa Re), stated that facultative business has significantly contributed to Africa Re's performance, demonstrating solid growth.
Speaking with AM Best, Karekezi (pictured) emphasized Africa Re's strong positioning within the wider reinsurance market, despite its limited exposure to the US market.
Karekezi noted that, globally, the reinsurance market has shown improvement, marking the first time in five years that key metrics have turned favorable.
“The turning of the corner is great news for many of all the initiatives and our service to the society, which is protection, providing coverages, supporting economies to grow and to become resilient,” Karakezi said.
He cited rising demand for products addressing natural catastrophes, climate risks, and emerging cybersecurity needs. He added that Africa Re’s recovery from the losses of 2022 has strengthened its financial foundation, which will support its objective to protect and enable the continued growth of economies worldwide.
Africa Re surpassed $1 billion in gross written premium this year, a milestone attributed to the corporation’s diversified portfolio. Karekezi said that Africa Re’s resilience comes from spreading risk across the continent’s 54 countries, allowing it to offset currency declines in larger economies, such as Nigeria, Ethiopia, and Egypt, with gains in other regions.
“Also, you have to have a component of international business, which has been doing well in terms of top line because of the hard market in which we are. So those are the drivers. Diversification on the continent, as well as growth in the international business,” Karakezi said.
On diversification by geography and business line, Karekezi highlighted Africa Re’s emphasis on business written and settled in US dollars, primarily in sectors like oil and infrastructure.
“You have to have really strong growth on those which are facultative businesses. This has been very good for Africa Re in 2023,” he said.
In discussing Africa’s increasing natural catastrophe exposures, Karekezi addressed the challenges of capital and capacity in modeling risks. He noted that reinsurance has consistently supported African insurers, with quick response times for claims.
“We have strong support from other insurers,” he said. “The main issue is still capital and capacity for modeling. But whenever countries have developed those kinds of schemes, like the one of Morocco and other countries, so we have responded. An example can be given for the Morocco earthquake, which we are marking the first year.”
Karekezi said that the main limitation is not supply-side but demand-side, as many African countries are still developing the frameworks to utilize such reinsurance schemes effectively.
“I may say that the speed of implementation and going to market is rather slow. We wish to see more and more demand so that we can respond by bringing more capital to support those products,” he said.
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