Compagnie Centrale de Réassurance Receives Stable Credit Ratings

AM Best Affirms Ratings for Compagnie Centrale de Réassurance

Compagnie Centrale de Réassurance (CCR) recently received affirmation from AM Best regarding its financial strength. The agency granted CCR a Financial Strength Rating of B+ (Good) accompanied by a Long-Term Issuer Credit Rating of 'bbb-' (Good). This acknowledgment highlights CCR's stable outlook in an ever-evolving market environment.

Strong Balance Sheet and Operating Performance

The ratings underscore CCR's robust balance sheet strength, which AM Best evaluates as very strong. This strength is attributed to the company's superior risk-adjusted capitalization as indicated by Best’s Capital Adequacy Ratio (BCAR). Furthermore, CCR showcases low underwriting leverage while maintaining efficient internal capital generation, critical for sustainable growth.

State Support and Risk Factors

CCR operates with the backing of a state guarantee through an interest-free loan facility. This support is particularly essential when addressing potential losses from Algeria's compulsory natural catastrophe scheme that CCR manages. While the investment portfolio is primarily concentrated in Algeria—with about 95% of assets—this reliance introduces certain risks like economic and political volatility unique to the region.

Consistent Returns and Underwriting Profitability

AM Best noted CCR's consistent operational performance over five years, with a remarkable weighted average return on equity of 14.4%. The stability in financial results stems from solid technical outcomes, reflected in a combined ratio of 80.7% during the same period. The underwriting profitability is significantly bolstered by profitable domestic operations, ensuring a healthy financial outlook despite the less robust international portfolio performance.

Gradual International Market Expansion

Despite a dominance in the local market, CCR has gradually expanded its international business, demonstrating an adaptive strategy. In the current financial year, CCR secured DZD 47 billion (USD 348 million) in gross written premiums (GWP), with 84% sourced from Algeria. Such a strategic focus ensures CCR maintains a significant market presence while exploring opportunities abroad to diversify its revenue streams.

Continuing Development of Risk Management Framework

CCR recognizes the critical role of an evolving risk management framework as a key driver of future growth. The management team is committed to enhancing these capabilities, which include integrating advanced capital modeling into decision-making processes. Ongoing improvements in risk management will solidify CCR’s position in the reinsurance landscape.

About AM Best

AM Best is renowned for its expertise in credit ratings, news publishing, and data analytics, particularly in the insurance sector. The agency operates on a global scale, serving clients in over 100 countries. Its extensive network of offices includes major cities such as London, Amsterdam, and Hong Kong. For more information on AM Best’s services and ratings methodology, you can visit their official website.

Frequently Asked Questions

What financial ratings did AM Best affirm for CCR?

AM Best affirmed a Financial Strength Rating of B+ (Good) and a Long-Term Issuer Credit Rating of 'bbb-' (Good) for CCR.

How does the state guarantee affect CCR's operations?

The state guarantee provides CCR with an interest-free loan facility, which is crucial for managing risks related to Algeria's compulsory natural catastrophe scheme.

What were CCR's average returns over the last five years?

CCR achieved a weighted average return on equity of 14.4% from 2019 to 2023, illustrating strong operational stability.

What percentage of CCR's premiums come from Algeria?

Approximately 84% of CCR's gross written premiums (DZD 47 billion) in 2023 were generated from operations in Algeria.

What are CCR's plans for risk management improvement?

CCR aims to further develop its risk management framework by integrating advanced internal capital models to enhance decision-making and strategic outcomes.

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