A.M. Best Assigns Ratings to Compagnie Commune de Reassurance des Etats Membres de la Conference Interafricaine des Marches d’Assurances

LONDON - A.M. Best has assigned a financial strength rating of B (Fair) and an issuer credit rating of "bb+" to Compagnie Commune de Reassurance des Etats Membres de la Conference Interafricaine des Marches d'Assurances (CICA Re) (Togo). The outlook assigned to both ratings is stable.

CICA Re's ratings reflect its modest business profile, good operating performance and adequate risk-adjusted capitalisation. Offsetting rating factors include the company's underdeveloped enterprise risk management (ERM) framework and significant exposure to the country risk emanating from its operations in the Conference Interafricaine des Marches d'Assurances (CIMA) region.

CICA Re was created in 1984 as a supranational reinsurer for the CIMA zone, with the aim to increase the underwriting capacity and premium retention in the region, whilst contributing toward the development of the insurance and reinsurance markets. Therefore, CICA Re benefits from a good niche market position, supported by legal compulsory cessions in the CIMA area, and solid relationships with regional cedants. The company also acts as a traditional reinsurer, writing conventional business domestically and abroad. CICA Re's gross written premium grew by a compound annual growth rate of 14.4% over the past five years, to reach CFAF 30.3 billion (USD 56.1 million) at year-end 2014, as a combined result of the increasing reinsurance demand in the CIMA region and the company's efforts to expand internationally to improve its geographical footprint. However, CICA Re's overall profile remains modest, owing to the small size of the CIMA zone and to the company providing following capacity in the global reinsurance market.

CICA Re has a good, albeit volatile, track record of operating profitability. The company reported a net profit of CFAF 2.7 billion (USD 4.9 million) for 2014, up from CFAF 2.1 billion (USD 4.4 million) the previous year, driven by a better claims experience in the motor and aviation lines of business, which translated in an improved overall combined ratio of 92.7% for 2014, down from 97.8% for 2013 (as per A.M. Best's calculations). Future performance is expected to remain positive but subject to volatility as CICA Re continues its international expansion, which could put pressure on its technical performance, whilst the company remains exposed to market risk prevailing in the CIMA region, where it holds the majority of its investments.

CICA Re's risk-adjusted capitalisation is adequate for the ratings, supported by mainly short-tail business lines and a solid retrocession panel. Good earnings retention has enabled the company to increase its capital and surplus considerably in the past five years from CFAF 17.7 billion (USD 36.6 million) in 2010 to CFAF 34.3 billion (USD 63.6 million) at year-end 2014. Despite the decision taken in 2014 to increase the dividend pay-out ratio from up to 30% to up to 50%, the company is expected to continue to generate sufficient internal capital to fund its prospective strategic initiatives.

CICA Re's ERM capability is currently deemed underdeveloped relative to its risk profile, especially considering the company's exposure to a high level of country risk associated with its profile in Africa. To date, the work conducted by the ERM function has been mostly reactive, focusing on identifying risks and developing the control environment after incidents had occurred. Furthermore, the company is dependent on third parties to calculate its probable maximum losses and relies on regulatory input for managing its capital position.

This press release relates to rating(s) that have been published on A.M. Best's website. For all rating information relating to the release and pertinent disclosures, including details of the office responsible for issuing each of the individual ratings referenced in this release, please see A.M. Best's Recent Rating Activity web page.

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A.M. Best

Charlotte Vigier, +(44) 20 7397 0270

Senior Financial Analyst



Ghislain Le Cam, CFA, +(44) 20 7397 0268

Associate Director, Analytics



Christopher Sharkey, +(1) 908 439 2200, ext. 5159

Manager, Public Relations



Jim Peavy, +(1) 908 439 2200, ext. 5644

Assistant Vice President, Public Relations


Source: A.M. Best Company, Inc.