AM Best Revises Issuer Credit Rating Outlook to Stable for WAICA Reinsurance Corporation PLC

AM Best has revised the Long-Term Issuer Credit Rating (Long-Term ICR) outlook to stable from negative and affirmed the Financial Strength Rating (FSR) of B (Fair) and the Long-Term ICR of “bb+” (Fair) of WAICA Reinsurance Corporation PLC (WAICA Re) (Sierra Leone). The outlook of the FSR is stable.

The Credit Ratings (ratings) reflect WAICA Re’s consolidated balance sheet strength, which AM Best assesses as strong, as well as its strong operating performance, limited business profile and marginal enterprise risk management.

The revision of the Long-Term ICR outlook to stable from negative reflects the improvement in WAICA Re’s balance sheet strength fundamentals. WAICA Re’s risk-adjusted capitalisation was at the strongest level at year-end 2023, as measured by Best’s Capital Adequacy Ratio (BCAR), with an increased buffer in BCAR scores supported by a capital injection and healthy internal capital generation in 2023. In addition, the company’s investment risk reduced in 2023, driven by moderate investments made in bonds of excellent credit quality and significant impairment of its holdings of Ghanaian external debt, which is currently in default and in the process of restructuring, with an agreement in principle reached with Ghana’s external creditors in June 2024. Partially offsetting rating factors include WAICA Re’s exposure to significant economic, political and financial system risks associated with the countries where it operates.

AM Best views WAICA Re’s operating performance as strong, considering it has reported robust return-on-equity (ROE) ratios in recent years, which have significantly exceeded the benchmark interest rates in the markets where it operates. WAICA Re’s earnings are underpinned by a solid and stable technical performance, benefitting from its predominantly facultative portfolio. AM Best expects WAICA Re’s prospective earnings to remain strong, complemented by positive, albeit modest, investment returns, reflecting the low-yielding assets in which the company primarily invests.

WAICA Re is a composite reinsurer writing business in more than 90 countries. The organisation’s business profile benefits from a relatively diversified underwriting portfolio, albeit with a moderate concentration of insurance revenue in West Africa. The company reported insurance revenue of USD 255.7 million on a consolidated basis in 2023. AM Best expects WAICA Re to continue to grow its insurance revenue gradually through diversification into other markets.

This press release relates to Credit Ratings that have been published on AM Best’s website. For all rating information relating to the release and pertinent disclosures, including details of the office responsible for issuing each of the individual ratings referenced in this release, please see AM Best’s Recent Rating Activity web page. For additional information regarding the use and limitations of Credit Rating opinions, please view Guide to Best’s Credit Ratings. For information on the proper use of Best’s Credit Ratings, Best’s Performance Assessments, Best’s Preliminary Credit Assessments and AM Best press releases, please view Guide to Proper Use of Best’s Ratings & Assessments.

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 does business in over 100 countries with regional offices in London, Amsterdam, Dubai, Hong Kong, Singapore and Mexico City. For more information, visit www.ambest.com.

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