By Favour Nnabugwu

African Reinsurance Corporation (Africa Re) has given its existing shareholders up till next month to fully subscribe and pay for its new shares.

The governing board of the reinsurer at its General Assembly held in Rabat, Morocco decided to extend the subscription and payment period for its new shares being offered to the current shareholders at US$ 182.7 per share till end of May next year.

Disclosing this, the Chairman of the Board of Directors and the General Assembly, Mr. Musa S. El Naas from Libya, let out some of the major decisions taken at the Morocco meeting in the areas of technical, financial and human resource management, including the readjustment of the retrocession programme, the review of underwriting guidelines and the investment policy, the approval of major investment projects or the strengthening of the policy to attract, recruit and retain the best skills.

According to him, “With respect to the Corporation’s fourth capital increase, the General Assembly took note of progress made and was delighted that existing shareholders (States, Development Finance Institutions, insurance and reinsurance companies) have subscribed more than 70 per cent of the new shares”

Africa Re is an international financial institution comprising 41 member countries of the African Union (AU) and development finance institutions such as the African Development Bank (AfDB), the International Finance Corporation (IFC), DEG (Germany), PROPARCO (France) and FMO (Netherlands), as well as about 100 insurance and reinsurance companies operating in the member countries.

The Chairman also commended the results of the Corporation in 2011 as confirmed by Standard & Poor’s and A.M. Best who reaffirmed the Corporation’s financial strength rating (A-).

Standard & Poor’s, a division of McGraw-Hill Companies has assigned a Stable A- rating to Africa Re’s operating structure, affirming its strong financial strength, counterparty credit rating, diversified competitiveness in the African insurance markets and impressive business outlook.

“Africa Re continues to be supported by strong capitalization, including a growing level of capital redundancy which is supportive of future premium growth. On December 31, 2011, Africa Re’s capital adequacy was redundant to 40% above the A rating level. Its capital adequacy was boosted by recent capital injection, primarily from existing shareholders. Capitalization is also supported by appropriate reserving policies and retrocession protection.”

As a regional reinsurer, Africa Re’s operating performance remained strong and stable, improving its net combined ratio in 2011 to 92% below its already-strong five-year average. Also, its return on revenue improved to 13% in 2011 from 9% in 2010, with strong competitiveness across the African market netting approximately 10% market share.

The General Assembly approved the Report of the Board of Directors on the 2011 accounts, which confirmed the Corporation’s financial strength, as well as its ability to meet its commitments to cedants. Consequently, the General Assembly decided to maintain the current dividend distribution policy to significantly improve returns on investment for shareholders.