Sub-Saharan reinsurers post third double-digit ROE year
Sub-Saharan Africa reinsurers posted a third straight year of double-digit return on equity in 2025, with a weighted average ROE of 14.2%, the highest level in ten years. The strong return on equity signals robust underwriting discipline across the region.
Pricing conditions have been stabilizing since the first half of 2025, and whether the region’s reinsurers can sustain performance as the hard market cycle fades is a question AM Best’s latest segment report begins to address.
Combined ratios fell from a 2019 peak of 99.5 to 91.2 in 2025. The drop reflects tighter risk selection and aggressive pricing in loss-prone markets such as Kenya, plus a general hardening of rates across the continent from 2023 to 2024. The improvement in combined ratios indicates that loss-control measures are taking effect.
Since early 2025, rates have largely stabilized. At the 2026 renewal window, rates improved in Anglophone West Africa but remained flat for most lines in East Africa.
Capital growth outpaces risk retention
Aggregate capital reached US$3 billion in 2025, yet the retention ratio slipped to 78.6%, down from 87.5% in 2016.
AM Best notes that capacity from Africa-based reinsurers remains insufficient, forcing many local firms to rely on global partners.
As SSA economies have industrialized, insurance needs have grown faster than the local market’s ability to retain risk, particularly for complex property and energy exposures.
SanlamAllianz Re Ltd, based in Mauritius, was downgraded and placed under review on October 2 after AM Best cited marginal enterprise risk management and a net loss of US$20.4 million in 2025, with further losses in early 2026. All other rated reinsurers kept a stable outlook.
Market exposure and outlook
Direct exposure to the ongoing Middle East conflict is limited, as most companies carry war exclusions. War exclusions are standard clauses that limit liability for geopolitical events.
For South Africa, a net oil importer, the conflict has lifted inflation by 150 basis points since May 2026, prompting the IMF to lower real-GDP forecasts for several SSA economies. Higher inflation pressures have ripple effects on underwriting costs.
Prolonged hostilities could compress underwriting margins and increase volatility in financial and currency markets, according to AM Best.
Africa Re reported FY2025 gross written premium of $1.34 billion, a 10% year-on-year increase. Net profit rose 51% to US$199 million on the back of disciplined underwriting and record investment income.
Based on 2024 data, Africa Re underwrites roughly one-fifth of the continent’s reinsurance premiums. The total SSA market generated US$6.27 billion, representing about 1.6% of global reinsurance underwriting. The market’s share shows its role in the global reinsurance sector.
“The growing geographical diversification of invested assets and revenue further supports their resilience.”
