AM Best has affirmed the Financial Strength Rating of B+ (Good) and the Long-Term Issuer Credit Rating of “bbb-” (Good) of Compagnie Centrale de Réassurance (CCR) (Algeria). The outlook of these Credit Ratings (ratings) is stable.

The ratings reflect CCR’s balance sheet strength, which AM Best assesses as very strong, as well as its strong operating performance, neutral business profile and marginal enterprise risk management.

CCR’s balance sheet strength assessment reflects the company’s strongest level of risk-adjusted capitalisation, as measured by Best’s Capital Adequacy Ratio (BCAR), supported by relatively low underwriting leverage and good internal capital generation. The company benefits from a state guarantee in the form of an interest-free loan facility, covering potential losses arising from Algeria’s compulsory natural catastrophe scheme written by CCR, net of retrocession. A partially offsetting rating factor is CCR’s moderate dependence on retrocession, which is used to protect peak exposures, notably domestically in Algeria. Reinsurance credit risk is managed through the use of a panel of financially sound retrocession partners. The balance sheet strength assessment also considers CCR’s significant exposure to the elevated levels of economic, political and financial system risk associated with Algeria, where the company is domiciled, holds approximately 95% of its invested assets and derives the majority of its business.

CCR has a long-term track record of strong operating performance, with a five-year (2019-2023) weighted average return on equity of 14.4% (as calculated by AM Best). Operating results have been underpinned by strong and stable technical results, highlighted by a five-year (2019-2023) weighted average combined ratio of 80.7% (as calculated by AM Best). Underwriting profitability is driven by highly profitable domestic business, which compensates for the relatively weaker performance of the company’s international portfolio. Results are supplemented by good investment returns, with a five-year average investment yield (including gains) of 5.2%. AM Best expects prospective underwriting profitability to remain robust, supported by relatively low net risk retention, a conservative underwriting approach and favorable domestic market conditions.

CCR’s neutral business profile reflects its dominant position in Algeria’s reinsurance market, where it benefits from compulsory reinsurance cessions and had an estimated market share of 66% in 2023, as measured by ceded premiums. However, the company’s strong domestic market position creates a concentration and reliance on the Algerian market, and this remains a partially offsetting factor. In 2023, CCR wrote DZD 47 billion (USD 348 million) of gross written premium (GWP), of which 84% was generated in Algeria. The balance of GWP was represented by international business, which has been gradually increasing in recent years.

CCR’s risk management framework is considered to be evolving and has been an area of focus for the company in recent years. AM Best expects risk management capabilities to continue to develop with the continued integration and further enhancement of an internal capital model to assist the company’s strategic decision-making process.

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