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African reinsurance
In Africa, the role of reinsurance goes beyond purely technical and financial issues. For relatively young countries seeking a coherent economic paradigm, control of this activity, a source of foreign exchange, stands as an instrument of sovereignty. This has led to a series of regulations governing foreign companies' access to national insurance and reinsurance markets.
In the long term, however, this sovereignist policy has the effect of fragmenting markets and further weakening their players. The latter are already up against enormous constraints, including low direct insurance premiums and a high number of players.
Outside South Africa, insurance penetration and density vary from low to very low in almost all of the other 53 African countries. The 51 reinsurers operating on the continent share an extremely low premium. These same reinsurers, already subject to the dictates of ratings and restrictions on access to neighboring markets, are required to meet international competition. In fact, four of the largest players are based in South Africa, a market closely linked to Lloyd's of London.
As a result, in 2024, the 48 African reinsurers listed by Atlas Magazine underwrote 6.269 billion USD, or 1.6% of the global total.
Furthermore, the African reinsurance market is highly concentrated, with the top 10 reinsurers underwriting 73% of the continent's premiums, whereas globally, the top 10 account for only 59% of premiums.
This means that there are few premiums to be shared among many players who have limited financial resources and capacity to expand into other continents.
In conclusion, the African reinsurance market is at a crossroads, facing significant structural challenges. Strengthening local capacity requires removing barriers to entry and promoting continental cooperation, which does not rule out future mergers and acquisitions.
