Tanzania Reinsurance Company Maintains Strong Ratings
Recently, AM Best affirmed the Financial Strength Rating of B (Fair) and the Long-Term Issuer Credit Rating of ‘bb+’ (Fair) for Tanzania Reinsurance Company Ltd., known as TAN RE. This affirmation is a testament to the stability and financial resilience of the company.
Credit Rating Insights
The current outlook for TAN RE's credit ratings is stable, reflecting its robust balance sheet strength, which AM Best describes as very strong. The ratings are influenced by the company’s strong operating performance, albeit with a limited business profile and marginal enterprise risk management.
Factors Contributing to the Ratings
TAN RE’s balance sheet is largely supported by its risk-adjusted capitalisation, which sits comfortably above the necessary requirements for the highest assessment category, as determined by Best’s Capital Adequacy Ratio (BCAR). The company benefits from low underwriting leverage, positioning it strongly against potential financial downturns.
Dependence on Retrocession
While TAN RE moderately relies on retrocession coverage to bolster its underwriting capability and to mitigate large risks, the associated credit risks are significantly lessened through a retrocession panel characterized by sound financial strength. Nonetheless, the company is not without its challenges.
Challenges Faced by TAN RE
The credit ratings also take into account TAN RE’s exposure to high economic, political, and financial system risks inherent in Tanzania, from where the company conducts most of its business and channels substantial investments.
Strong Historical Performance
Looking at historical performance, TAN RE has exhibited a commendable track record, highlighted by a return-on-equity ratio that has consistently exceeded 10% for the past five years. The driving force behind these results is the company's solid non-life underwriting profitability, transitioning into a net/net combined ratio of 90% for 2023, improving from 92% in 2022. Additionally, operating earnings are positively impacted by moderate investment returns.
Market Position and Revenue
Despite being a small composite reinsurer on a global scale, TAN RE generated reinsurance service revenue amounting to USD 83 million in 2023. With a concentrated business model focused on the Tanzanian market, the company enjoys privileged access supported by mandatory cessions derived from business ceded by local insurers.
About AM Best
AM Best is a reputable global credit rating agency, renowned for its role in news publishing and data analytics tailored to the insurance sector. Operating from its headquarters in the United States, AM Best extends its services to over 100 countries, maintaining regional offices in key cities such as London, Amsterdam, Dubai, Hong Kong, Singapore, and Mexico City.
Frequently Asked Questions
What are the current ratings of TAN RE?
AM Best has affirmed TAN RE's Financial Strength Rating at B (Fair) and a Long-Term Issuer Credit Rating of ‘bb+’ (Fair) with a stable outlook.
What financial performance metrics does TAN RE achieve?
In the past five years, TAN RE has maintained a return-on-equity ratio over 10% and achieved a net/net combined ratio of 90% in 2023.
How does TAN RE manage risks?
TAN RE employs retrocession coverage to enhance its underwriting capacity and mitigate exposure to significant risks, supported by a financially stable retrocession panel.
What is the revenue of TAN RE for 2023?
The reinsurance service revenue for TAN RE reached USD 83 million in 2023.
Where is AM Best headquartered?
AM Best is headquartered in the United States and operates in over 100 countries, affirming its global presence in the insurance industry.
