AM Best has affirmed the Financial Strength Rating of B (Fair) and the Long-Term Issuer Credit Rating of “bb” (Fair) of Ethiopian Reinsurance S.C. (Ethio Re) (Ethiopia). The outlook of these Credit Ratings (ratings) is stable.

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

Ethio Re’s balance sheet strength is underpinned by its risk-adjusted capitalisation, as measured by Best’s Capital Adequacy Ratio (BCAR), which is expected to remain at the strongest level. AM Best expects Ethio Re to maintain healthy capital buffers in excess of the strongest level as it continues to execute its strategic growth plans, benefitting from internal capital generation and capital injections from its shareholders. An offsetting rating factor is Ethio Re’s exposure to high levels of economic risk and very high levels of political and financial system risks in Ethiopia, where the majority of its business is sourced and all of its invested assets are located. In AM Best’s view, these risks are mitigated partially by the company’s conservative investment portfolio by asset class, which is weighted toward cash and deposits.

Ethio Re has a track record of adequate operating performance, evidenced at fiscal year-end June 2025 by a return-on-equity ratio (ROE) of 19%. AM Best notes that this ROE should be viewed in the context of Ethiopia’s high National Bank Rate, which reached 16% in July 2026. More recently, the company’s non-life underwriting performance has been robust, albeit subject to volatility, with the net/net combined ratio improving from a high of 108% in 2023, to 92% in 2025. Prospectively, AM Best expects Ethio Re’s investment income to remain the primary contributor toward overall earnings, reflecting its low net underwriting leverage and the favourable interest rates offered by domestic banks in Ethiopia.

Ethio Re is a small reinsurer by global standards, with insurance service revenue of USD 22 million at fiscal year-end June 2025. The company was established in 2016 and writes a portfolio of composite reinsurance business in Ethiopia and a select number of other African markets. The company benefits from privileged market access in Ethiopia, where over 95% of its revenue is generated, which includes mandatory cessions from local cedants and the first right of refusal on domestic business ceded.

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