Continental Reinsurance Holdings Limited has initiated a $156.1 million public offer aimed at bolstering its capital base and enhancing its underwriting capacity. The offer, set to close on October 9, comprises $126.1 million from the sale of existing shares and $30 million in fresh capital. This move follows the approval of a revised timetable by the Botswana Stock Exchange. Notably, Continental Re will be the first reinsurer to seek a listing on the Botswana Stock Exchange through this transaction.
The capital raising effort by Continental Re comes at a time when Africa's insurance penetration remains low despite increasing exposure to various commercial risks. The reinsurance market in Africa generated an estimated $6.3 billion in gross premiums in 2024, marking an 89 percent expansion between 2015 and 2024. However, the continent's share of global reinsurance premiums stands at only about 1.6 percent. Furthermore, insurance penetration in Africa is approximately 2.8 percent of GDP, compared to around 6.8 percent globally.
Continental Re aims to capitalize on the market gap by expanding its capacity for risks associated with infrastructure, energy, agriculture, aviation, and marine activities. The fresh capital raised will support the company's underwriting capacity, solvency, Alternative Solutions business, and investments in technology and operations across its African markets. This strategic move is expected to deepen the company's operations across African markets and enable it to participate in the continent's growing insurance and reinsurance demand.
The company reported a significant increase in profit before tax, which rose by more than 50 percent year-on-year to BWP105.3 million ($9.7 million). Continental Re's insurance revenue stood at BWP2.32 billion ($173.1 million), with a gross written premium of BWP2.27 billion ($165.6 million). The company's loss ratio was 33 percent, while the combined ratio improved to 92 percent from about 94 percent in the preceding year.
Continental Re holds a B+ financial strength rating from AM Best with a stable outlook. The shares in the public offer are being offered at BWP1 each, with a minimum application of 200 shares. This capital raising initiative is poised to provide the company with additional capacity to support its pan-African growth strategy and address the needs of the underpenetrated African insurance market.
The African reinsurance market presents significant growth opportunities due to its low insurance penetration levels. With a growing economy and increasing commercial activities, the demand for insurance and reinsurance products is expected to rise. Continental Re's strategic expansion and capital raising efforts position it to tap into this growing demand and strengthen its market presence.
The successful completion of the public offer will enable Continental Re to further solidify its position in the African reinsurance market. The company's ability to deepen its operations across African markets and participate in the growing insurance and reinsurance demand will be significantly enhanced. This move is expected to contribute to the development of the African insurance industry and improve the continent's resilience to various commercial risks.
Key points
- Continental Reinsurance Holdings Limited launches a $156.1 million public offer to strengthen its capital base and expand underwriting capacity across Africa.
- The company aims to capitalize on the low insurance penetration in Africa and expand its capacity for risks associated with infrastructure, energy, agriculture, aviation, and marine activities.
- The capital raising effort will support Continental Re's pan-African growth strategy and enable it to participate in the continent's growing insurance and reinsurance demand.
