Africa Re sustains improved growth, reflects recovery from pandemic headwinds
The Africa Reinsurance Corporation (Africa Re) has recorded a gross premium income of $421 million in the first six months of 2021 compared to $393 million reported in the same period of 2020, translating to a 7.2 percent growth, which is a reflection of the on-going recovery of businesses and the society from the new Covid-19 operating environment.
The good performance was supported by additional facultative acceptances mostly in the oil & gas portfolios.
Corneille Karekezi, the group MD/CEO of the Corporation, while commenting on the performance at the end of the first half-year of 2021 stated that: “it is pleasing to note that the positive performance achieved in the first quarter of the year is being sustained through the first half of 2021 and we remain cautiously optimistic for the rest of the year, barring any unforeseen major losses.”
There was also a positive impact of the appreciation of a few of our operating currencies against the US Dollar, especially the Rand and CFA, as the gains on currency fluctuation were slightly offset by the significant devaluation of the Sudanese Pound.
The year-to-date claims experience as measured by the net incurred loss ratio improved to 61.9 percent compared to 64.6 percent in the same period of 2020.
The restructuring of previously poor performing portfolios continues to yield positive results on the claims experience despite a slight increase of the overall cost of the Covid-19 related insurance claims which continue however to be within expectation.
The increase by 22 percent of the business acquisition costs from $71 million in June 2020 to $86 million, translating to an expense ratio of 28.5 percent compared to 24.4 percent in June 2020, was a result of the increase in the top line combined with higher than usual profit commissions paid to ceding insurance companies whose solvency relief contracts performed exceptionally better.
Consequently, the combined ratio at the end of June 2021 stood at 96.9 percent, an improvement over prior year’s 98.1 percent.
As a result, net underwriting profit for the 1st semester of 2021 closed at $9.2 million, outperforming the $5.4 million reported in June 2020 by 69.1 percent.
Investment income for the reported period was $31.3 million, a significant improvement of 68.3 percent over $18.5 million recorded in the first semester of 2020.
The positive performance was driven by capital gains and improved performance of most equities leading to higher dividend paid.
As a result of above underwriting and investment performance, the Net Profit for the 1st semester of 2021 was $23.7 million, outperforming by 27 percent the $18.7 million achieved in the same period of 2020.