New money for east African reinsurance

An extra-ordinary general assembly held on 28 March, 2014 in Nairobi approved the admission of DEG into the shareholding fold. Details indicate that DEG will be investing an 11% stake in the company worth US$15m. The bank will also be represented on the board of Zep-Re. DEG is the second international development finance institution to join Zep-Re, after the African Development Bank (AfDB), which joined the company in 2011 and currently holds a 13% stake. DEG invests in private-sector businesses in developing and transition countries for the purpose of contributing to sustainable growth and improved the living conditions of the local population.hideDEG becomes the 36th investor in Zep-Re. Other shareholders include COMESA member states, various public and private insurance companies operating in the COMESA region, the Eastern and Southern Africa Development Bank (PTA Bank) and the African Development Bank. Zep-Re, also known as the PTA Reinsurance Company, is charged with the task of promoting trade, development and integration within the COMESA region through the trade of insurance and reinsurance business. The reinsurer manages COMESA Yellow Card, a motor vehicle insurance scheme which is valid in all the participating countries and covers third-party liabilities and medical expenses for the driver of the vehicle and any passengers. COMESA Yellow Card’ also facilitates cross-border movement of vehicles between COMESA member countries, meaning transporters and motorists do not have to buy insurance cover at each border post they cross. Zep-Re also manages the COMESA Customs Bond Guarantee (RCTG) Scheme, a customs transit regime designed to facilitate the movement of goods under customs seals in the COMESA region and to provide the required customs security and guarantee to the transit countries. Zep-Re is rated B+ (Good) for financial strength and ‘bbb-’ for issuer credit rating by AM Best Europe as per the rating released in December 2013. “The outlook for both ratings remains stable. The ratings reflect its strong risk-adjusted capitalisation, solid and consistent operating performance and established competitive position within its regional reinsurance market,” noted AM Best. The rating agency noted that Zep-Re’s good competitive standing in the southern and eastern regions of Africa is enhanced by its privileged access to business. “Upward rating pressure could occur if Zep-Re continues to demonstrate profitable growth over the long term whilst maintaining risk-adjusted capitalisation at a supportive level,” the agency concluded. Afro Asian boost for political risk Meanwhile Afro-Asian Insurance Services has boosted the region’s reinsurance political risk and terrorism sector through a new reinsurance product. It effectively increases what can be underwritten by more than 220 per cent. Previously, the maximum insurance risk for a single business was Ksh400m, but the new product will increase this limit to US$15.2m. Christian Ramamonjiarisoa, Group Director for Afro-Asian Insurance in Eastern and Central Africa, said: “This additional capacity now allows insurance companies to take bigger risks relating to political and terrorism risks, and offers companies and organisations more leeway to increase their investments without the worry of such risks.” He added: “If the capacity exceeds this amount, we can still transfer the reinsurance to London for up to US$40m.”

New money for east African reinsurance

Want to read this article?

Read Next

Risk managers taking centre stage in ESG

UK market must innovate, not exclude emerging risks: BIBA

Markel ‘reinforces commitment’ to Chinese market

AM Best improves outlook for Spanish market as talks underway to boost nat cat scheme

Zurich expects P&C prices to hold stable after commercial rates rise 5% in Q1

Risk managers taking centre stage in ESG

UK market must innovate, not exclude emerging risks: BIBA

Markel ‘reinforces commitment’ to Chinese market

AM Best improves outlook for Spanish market as talks underway to boost nat cat scheme

Zurich expects P&C prices to hold stable after commercial rates rise 5% in Q1

Want to read this article?

Read Next

Risk managers taking centre stage in ESG

UK market must innovate, not exclude emerging risks: BIBA

Markel ‘reinforces commitment’ to Chinese market

AM Best improves outlook for Spanish market as talks underway to boost nat cat scheme

Zurich expects P&C prices to hold stable after commercial rates rise 5% in Q1

Related Articles