Investor Relations

Dear Shareholders and Stakeholders,

In 2023, Continental Re demonstrated resilience amid a dynamic and challenging global environment. Despite facing economic uncertainties and industry-wide disruptions, we remained steadfast in our commitment to delivering value for our stakeholders. Our ability to adapt, innovate, and maintain operational excellence allowed us to continue growing and strengthening our African market position. This year underscored the importance of our medium-term strategy, built on a foundation of prudent risk management, customer-centric solutions, and a relentless focus on sustainability. Our performance has once again demonstrated Continental Re’s ability to deliver even in difficult times. As we progress, our resilience will remain the cornerstone of our success and guide our ambitions for future growth.

Operating Environment

Macroeconomic Overview

The global economy has demonstrated resilience from the multiple shocks in recent years, especially the Covid-19 pandemic, geo-political tensions, and the cost-of-living crises, with the risk of a global economic recession averted through the deployment of aggressive rate hikes and withdrawal of fiscal support amid high debt. While these interventions are expected to give short-term relief by taming inflation, they are expected to slow down economic activities in subsequent years. In advanced economies, these interventions have been largely effective. The emerging markets and developing economies with robust economic fundamentals have followed a similar trend while some economies may need to extend the policymakers’ intervention for an extended period.

According to Africa’s Macroeconomic and Performance Outlook published by the African Development Bank (AfDB), the projected economic growth declined in 2023 across the five regions and the continent compared with 2022. Central Africa grew by 3.82% (2022: 5.22%), East Africa grew by 3.51% (2022: 4.38%), North Africa grew by 3.93% (2022: 4.56%), Southern Africa grew by 1.61% (2022: 2.81%), West Africa grew by 3.20% (2022: 3.88%) and the continent at large grew by 3.24% (2022: 4.06%). The continent is plagued by the continued devaluation of its currencies driven by exchange rate adjustments, mixed monetary policies, decreased capital inflows, and a slowdown in exports. The Nigerian Naira (NGN), South African Rand (ZAR), Egyptian Pound (EGP), Ethiopian Birr (ETB), Kenyan shilling (KES) and Sudanese pound (SDG) depreciated by -49.20%, -7.05%, -19.95%, -4.86%, -21.40% and -5.60% respectively, while West Africa CFA Franc (XOF) and Moroccan dirham (MAD) appreciated by +4.09% and +5.78% respectively compared with the closing exchange rates of 31 December 2022.

Industry Overview

The insurance industry has adopted International Financial Reporting Standards (“IFRS”) IFRS 17 (Insurance Contracts) replacing IFRS 4 (Insurance Contracts) and IFRS 9 (Financial Instruments) replacing IAS 39 (Financial Instruments) collectively termed the “New Standards” from 1 January 2023. IFRS 17 is a comprehensive standard for the recognition, measurement, presentation, and disclosure of insurance contracts. The primary goal is to establish transparency, comparability, and relevance in the financial statements of insurance companies, ultimately benefiting stakeholders such as investors, regulators, and policyholders. IFRS 9 addresses the accounting for financial instruments, including their classification and measurement. With an effective date of 1 January 2018, the adoption of IFRS 9 brings about significant advantages for entities, including simplified processes, enhanced risk management, improved transparency, and global consistency, ultimately leading to better-informed decision-making and financial stability. The adoption of IFRS 9 is a prerequisite for the adoption of IFRS 17. Most entities have delayed the adoption of IFRS 9 till the adoption of IFRS 17.

Continental Re has adopted IFRS 9 and IFRS 17 accounting standards for the 2023 financial year. In accordance with the relevant requirements of these standards, Continental Re has retrospectively restated the comparative data for the same period last year. Continental Re will continue to report IFRS 4 and IFRS 17 metrics together in the foreseeable future.

Performance Summary

Despite the volatile market conditions, our key performance indicators attest to the fact that Continental Re is heading in the right direction. In 2023, based on IFRS 17 Figures, the group’s Insurance revenue grew by 30% to ₦112.5 billion from N86.4 billion. Insurance service expenses grew by 20% to ₦87.1 billion from ₦72.8 billion in 2022. Insurance service result stood at ₦9.1 billion while an insurance finance expense of ₦3.2 billion was reported in the profit or loss account. Continental Re achieved a combined ratio of 89.4% compared to 93.5% in 2022. Forex accounted for ₦2.3 billion (54%) of ₦4.1 billion increase in operating expense. Continental Re achieved a PBT of ₦23.5b, significantly driven by FX of ₦15.6 billion. The group also delivered a return on equity (ROE) of 24.6% while maintaining its B+ AM Best rating.

Strategy Review

As we continue to roll out initiatives under our corporate strategy – Alpha’24, Continental Re is dedicated to achieving profitable growth with the clear goal of building Africa’s premier reinsurer. We aim to offer tailored risk management solutions that support African economic development through a mix of traditional, innovative, and emerging products, competing effectively with local, regional, and global players.

In 2023, African Capital Alliance (ACA) acquired a 51% equity stake in CRe Holdings Limited from Sanlam Pan-African. CRe Holdings is the majority indirect shareholder in Continental Reinsurance Plc. Our financial stability remains strong, and we reassure all stakeholders of our ongoing commitment to providing top-tier reinsurance services.

Continental Re is piloting its Alternative Solutions initiative as we explore new revenue streams. This model, based on a ‘Capital Light’ approach, emphasizes intermediary engagement with customers to create added value within the reinsurance and insurance ecosystem, ultimately driving higher returns. Additionally, at Continental Re, we are increasing our focus on digital transformation to optimize internal operations, increase productivity, and enhance customer experiences.

We are also enhancing our asset management strategies to maximize investment returns, recognizing the crucial role of premium collections in growing investable funds. Acknowledging the challenges of premium collections across Africa, we are committed to implementing effective solutions to address this issue. With these initiatives, we aim to strengthen our financial position and continue our journey towards building the premier Pan-African reinsurer.

Continental Reinsurance is dedicated to operating sustainably as a responsible business entity. To underscore our commitment to accountability and transparency in managing environmental, social, and governance (ESG) matters across the Group’s operations, we have engaged a qualified consultant to guide our sustainability journey. This includes the development of a sustainability strategy and framework aligned with leading practices.

Risk Management and Compliance

In an increasingly complex risk landscape, we maintained a strong focus on risk management and compliance. We continuously monitored and assessed risks, ensuring robust underwriting practices. Our risk management framework has enabled us to maintain a healthy risk appetite, while diligently adhering to regulatory requirements and industry best practices. We are committed to upholding the highest standards of governance and transparency.

Talent Management

At Continental Re, we are very conscious of the fact that building a culture of high performance among employees goes a long way to ensuring competitiveness and attracting the best talents. As an organization that aims to recruit and keep the best talent, we have revamped our employee management practice, ensuring that remuneration and other levers of employee engagement are benchmarked against leading organizations. We have placed a high value on learning and development, and to this end, we continuously invest in training programs targeted at improving staff skills and capacity across various functions.

Conclusion

While we hold optimistic expectations for the year 2024, we are fully aware of the unpredictable nature of geopolitics and the economy, as well as the potential impact of regulatory changes, foreign exchange fluctuations, and shifting customer preferences. These obstacles have necessitated our ability to adapt quickly, think creatively, and implement innovative approaches to ensure our business remains relevant.

On behalf of the Board, I would like to thank all our employees for their dedication, our customers for their loyalty and patronage, and our shareholders for your patience and confidence in our Board and Management. We remain focused on our mission to protect and serve our customers, generate sustainable returns for our shareholders, and contribute to the growth and development of Africa’s reinsurance sector. Together, we will navigate the challenges and capitalize on the opportunities, ensuring a bright and prosperous future for Continental Re.

Lawrence Nazare,
Group Managing Director

Latest Financial Results

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Q2 2020

Quarter Ended Jun 27, 2020

Earnings Presentation 1PDF

Earnings Presentation 2PDF

Earnings Presentation 3PDF

Press Release 1PDF

Press Release 2PDF