AM Best affirms Kenya Re ratings despite weaker underwriting performance

Kenya Reinsurance Corporation has had its credit ratings affirmed by AM Best, which cited the Kenyan reinsurer’s strong capitalisation and adequate operating performance while highlighting deteriorating underwriting results and weaknesses in corporate governance.

The global insurance credit rating agency affirmed Kenya Re’s Financial Strength Rating at B (Fair) and its Long-Term Issuer Credit Rating at “bb+” (Fair), both with stable outlooks, according to an announcement published on Tuesday.

AM Best assessed Kenya Re’s balance sheet strength as very strong, supported by risk-adjusted capitalisation that remained at its highest assessment level under the agency’s Best’s Capital Adequacy Ratio model at the end of 2025.

However, the agency identified investment concentration as a source of risk, with private equity and real estate accounting for approximately one-third of the company’s investment portfolio. About 90 per cent of its invested assets are located in Kenya, leaving the reinsurer exposed to the country’s economic, political and financial system risks.

Kenya Re has maintained adequate operating performance over the past five years, with returns on equity moderately exceeding Kenya’s inflation rate, AM Best said. Its non-life underwriting business has generally recorded technical profits since corrective measures were introduced in 2020.

That performance weakened in 2025. The agency calculated Kenya Re’s net combined ratio at 110.6 per cent, partly reflecting impairments on receivables. A combined ratio above 100 per cent indicates that an insurer’s claims and expenses exceed the premiums it earns from underwriting, before investment income is taken into account.

The company’s overall earnings continue to benefit from investment income, although AM Best noted that the favourable interest-rate environment in Kenya was declining.

Kenya Re operates as a composite reinsurer, providing coverage across multiple lines of business in Africa, Asia and the Middle East. In its domestic market, it benefits from compulsory cessions, under which local insurers are required to transfer a portion of certain risks to the reinsurer.

The agency nevertheless assessed Kenya Re’s enterprise risk management as weak relative to its risk profile, saying its risk management framework remained under development.

AM Best also pointed to governance deficiencies, citing several suspensions or dismissals of senior executives over the past decade.

The stable outlooks indicate that AM Best has maintained its current assessment of Kenya Re’s credit standing, notwithstanding the operational and governance concerns identified in its review. The ratings announcement did not include a direct quotation from the agency or the reinsurer.

AM Best specialises in credit ratings and financial analysis of the insurance industry, assessing insurers’ financial strength and ability to meet their ongoing insurance obligations.