Positive pricing dynamics benefit MENA and SSA reinsurers – AM Best

Reinsurers domiciled in the MENA region continued to benefit from positive pricing momentum over the recent renewal periods, according to AM Best.

Gains have been made “albeit to a lesser extent than the global reinsurance market”, the rating agency said, with the region known for its competitive pricing. 

MENA takeaways

• Strong growth in gross written premium / insurance revenue (those firms reporting under IFRS 17) reported at year-end 2023, with reinsurers benefitting from favourable global reinsurance pricing momentum, high economic inflation, and new business opportunities.
• Reinsurance capacity for the region remains plentiful, sourced through large global reinsurers, regionally domiciled reinsurers, and carriers domiciled elsewhere in Africa and Asia.
• Regional reinsurers are further adapting pricing and modelling capabilities, following greater incidences of weather-related losses.
• The impact of individual operational challenges and difficult economic landscapes, particularly for those domiciled in non-oil producing countries, are reflected in the wide range of credit ratings among reinsurers in the region.

Sub-Saharan Africa’s reinsurers, on the other hand, “are resilient amid a complex and challenging risk environment”, AM Best noted in a separate report.

The underwriting results of SSA reinsurers have continued their trend of year-on-year improvement, the rating agency said.

Reinsurers in SSA are benefitting from robust pricing actions on loss-affected lines of business, as well as the global hardening of the reinsurance market, AM Best said.

SSA takeaways

• Creditworthiness of many African debt issuers remains under pressure, which is driving heightened levels of asset risk and is continuing to test the balance sheets of sub-Saharan Africa’s reinsurers.
• Underwriting results continue their trend of year-on-year improvement, benefitting from robust pricing actions on loss-affected lines of business, as well as the global hardening of the reinsurance market.
• Even with solid growth in capital in recent years, the capacity offered by Africa-domiciled reinsurers remains insufficient to meet market demand and local players often rely on support from global carriers.