S&P Affirms Africa Re ‘BBB+’ Ratings; Outlook Stable

June 23, 2003

Following a review, Standard & Poor’s has affirmed its ‘BBB+’ long-term counterparty credit and insurer financial strength ratings on Nigeria-based reinsurer African Reinsurance Corp. (Africa Re). The outlook is stable.

“The ratings reflect Africa Re’s strong business position, stable operating performance, impressive earnings track record, and strong capitalization,” said Standard & Poor’s credit analyst Peter Grant. “These factors are partly offset by subjective considerations of Africa Re’s modest size in absolute terms, and the potential volatility of the regions in which it specializes.”

Africa Re is forecasting premium growth over the next five years at a compound annual rate of approximately 12 percent. The challenge will be for the company to achieve this growth without compromising the quality, and hence the long-term profitability, of its book of business. Standard & Poor’s considers that Africa Re’s plans for continued geographical expansion into Southern Africa, the Middle East, and India, and its increasing involvement in the African energy sector, present both an opportunity and a potential risk to the company over the medium term.

The stable outlook reflects Standard & Poor’s confidence in Africa Re’s
ability to meet the challenges that lie ahead for the company.

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