Africa Re CEO highlights growth in discretionary business and market resilience

Corneille Karekezi, group managing director and CEO of African Reinsurance Corp (Africa Re), stated that the discretionary business has contributed significantly to Africa Re’s performance, demonstrating solid growth.

Speaking to AM Best, Karekezi (pictured) highlighted Africa Re’s strong positioning in 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 point is great news for many of our initiatives and service to society, which is protecting, providing coverage, supporting economies to grow and become resilient,” Karakezi said.

He cited increased demand for products that address natural disasters, climate risks and emerging cybersecurity needs. He added that Africa Re’s recovery from 2022 losses has strengthened its financial foundation, which will support its objective to protect and enable the continued growth of economies around the world.

Africa Re has surpassed $1 billion in gross written premium this year, a milestone attributed to the company’s diversified portfolio. Karekezi said Africa Re’s strength 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 an international business component, which has done well in terms of the top line because of the tough market we’re in. So they are the drivers. Diversification on the continent, as well as the growth of international business”, said Karakezi.

On diversification by geography and line of business, Karekezi highlighted Africa Re’s emphasis on US dollar-denominated and settled business, mainly in sectors such as oil and infrastructure.

“You have to have really strong growth in what are optional businesses. This has been very good for Africa Re in 2023,” he said.

In discussing Africa’s growing natural disaster exposures, Karekezi addressed capital and capacity challenges in risk modeling. He noted that reinsurance has consistently supported African insurers, with quick response times to claims.

“We have strong support from other insurers,” he said. “The main issue is still the capital and capacity for modeling. But whenever countries have developed those kinds of schemes, like that of Morocco and other countries, we have responded. An example can be given for the earthquake in Morocco, which we are marking the first year”.

Karekezi said the main constraint is not on the supply side, but on the demand side, as many African countries are still developing the framework to use such reinsurance schemes effectively.

“I can say that the speed of implementation and market release is quite slow. We want to see more and more demand so we can respond by bringing in more capital to support those products,” he said.

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