Fitch Ratings has revised African Risk Capacity’s (ARC) outlook to positive from stable, and has affirmed its Insurer Financial Strength (IFS) rating at ‘BBB+’ and Long-Term Issuer Default Rating (IDR) at ‘BBB’.
ARC is a specialized agency of the African Union established to help African governments improve their capacities to better plan, prepare, and respond to extreme weather events and natural disasters.
The credit rating agency said yesterday this outlook revision reflected ARC’s “strong progress in meeting its development objectives which, if sustained, could support a stronger company profile assessment within the next two years”.
“The improvement in ARC’s premium base, risk pool and claim payouts enhances the company’s geographic diversification, franchise and operating scale. In addition, the improved reach of the company’s development activities is likely to further increase its importance to sponsors,” the rating agency said.
ARC chief executive Lesley Ndlovu said they were delighted with the revision of their outlook to positive as it reflected the work they had done to raise their company profile and improve portfolio diversification.
“We are confident the support from our sponsors will grow as we expand ARC’s impact on the African continent... and the number of parametric insurance payouts we have been making in 2022 to respond to cyclones and droughts.”
In addition to strong growth in gross written premiums (GWP) in 2021, ARC’s support from German development bank KfW through the Federal Ministry for Economic Co-operation and Development, and the UK Foreign, Commonwealth; Development Office were cited as reasons for the revision.
Fitch expected that further capital support would be made available as ARC continued to meet its development goals.