AM Best’s Ethio Re ratings reflect its strong balance sheet
- May 20, 2025
- Posted by: Kassandra Jimenez-Sanchez
- Category: Insurance
AM Best has assigned Ethiopian Reinsurance S.C. (Ethio Re) a Financial Strength Rating of B (Fair) and a Long-Term Issuer Credit Rating of “bb” (Fair) with a stable outlook.
Ethio Re is a small reinsurer by global standards, established in 2016. It writes a portfolio of composite reinsurance business in Ethiopia and a select number of other African markets
At year-end June 2023, the company reported USD 35 million in gross written premiums, generating 95% of its revenue in Ethiopia.
According to the agency, these ratings reflect Ethio Re’s balance sheet strength, which AM Best assesses as very strong. This strength is underpinned by its risk-adjusted capitalization that is comfortably at the strongest level, as measured by Best’s Capital Adequacy Ratio (BCAR).
The ratings also reflect the reinsurer’s adequate operating performance, limited business profile and marginal enterprise risk management, according to AM Best.
As it continues to execute its strategic growth plans, the agency expects Ethio Re to maintain healthy capital buffers in excess of the strongest threshold, benefiting from internal capital generation and capital injections from its shareholders.
AM Best noted that the high levels of economic risk and very high levels of political and financial system risks in Ethiopia could be an offsetting rating factor. This is mainly due to the fact that Ethiopia is where the reinsurer sources the vast majority of its business as well as the location of all of its invested assets.
“In AM Best’s opinion, these risks are mitigated partially by the company’s conservative investment portfolio by asset class, with 84% of total investments held in cash and deposits at year-end June 2023, therefore limiting Ethio Re’s exposure to market risks and the ongoing re-structuring of Ethiopian sovereign Eurobonds,” the agency stated.
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