AM Best has affirmed the Financial Strength Rating of B (Fair) and the Long-Term Issuer Credit Rating of “bb+” (Fair) of Tanzania Reinsurance Company Ltd. (TAN RE) (Tanzania). The outlook of these Credit Ratings (ratings) is stable.

The ratings reflect TAN RE’s balance sheet strength, which AM Best assesses as very strong, as well as its strong operating performance, limited business profile and marginal enterprise risk management.

TAN RE’s balance sheet strength is underpinned by risk-adjusted capitalisation that is comfortably above the minimum required for the strongest assessment level, as measured by Best’s Capital Adequacy Ratio (BCAR), benefiting from low underwriting leverage. TAN RE is moderately dependent on retrocession coverage, which the company uses to support its underwriting capacity and manage its exposure to large risks; however, the associated credit risk is mitigated partially by a retrocession panel of sound financial strength. The ratings consider TAN RE’s exposure to the high levels of economic, political and financial system risks in Tanzania, where the company is domiciled, sources most of its business and invests the majority of its assets.

TAN RE has a track record of strong operating performance, evident by a return-on-equity ratio that exceeded 10% in each of the past five years. The company’s results are driven by its solid non-life underwriting profitability, which translated in a net/net combined ratio of 90% in 2023 (2022: 92%). Operating earnings are enhanced by moderate investment returns.

TAN RE is a small composite reinsurer by global standards, with reinsurance service revenue of USD 83 million in 2023. The company’s business is concentrated in Tanzania, where it benefits from a privileged market access, supported by mandatory cessions on reinsurance business ceded by domestic insurers.

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