AM Best has assigned a financial strength rating of B + (good) and a long-term credit rating of the issuer of “bbb-” to WAICA Reinsurance Corporation PLC (WAICA Re) (Sierra Leone). The outlook for these credit ratings is stable. The ratings reflect the solidity of WAICA Re’s balance sheet, which AM Best considers very solid, as well as its solid operational performance, its limited commercial profile and its management of marginal business risks.
The strength of WAICA Re’s balance sheet is supported by the highest level of risk-adjusted capitalization, as measured by Best’s Personal-Financial.com Adequacy Ratio. The valuation takes into account the company’s prudent investment strategy, the majority of the portfolio being held in cash and deposits, and a low level of dependence on retrocessions. A partially compensating factor is the company’s exposure to significant economic, political and financial system risks associated with the countries where WAICA Re operates, including Nigeria, Ghana and Sierra Leone.
WAICA Re has a history of solid operational performance, demonstrated by a five-year weighted average combined ratio (2015-2019) and a return on equity of 87.0% and 9.5%, respectively. Prospective earnings are expected to remain solid, supported by strong technical performance and complemented by positive, albeit modest, investment returns, reflecting the low-yielding assets in which the company primarily invests. AM Best considers that the commercial profile of WAICA Re is limited due to its relatively small size and its geographic concentration in Nigeria and Ghana. The company declared a gross written premium of $ 64.5 million in 2019. While AM Best expects WAICA Re to gradually increase its premium base through diversification in other markets, activities will continue to grow. come mainly from Nigeria and Ghana.