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A German development financial institution Deutsche Investitions – und Entwicklungsgesellschaft mbH (DEG) – is the latest investor in the Comesa region-focused reinsurance company Zep-Re, a development that is set to improve the reinsurer’s capital base and ability to service the region’s industry.
An Extra-Ordinary General Assembly held last month approved the admission of DEG into the shareholding fold.
Details indicate that DEG will be snapping up an 11 percent stake in the company worth $15 million.
The Bank will also be represented on the Board of Zep-Re. DEG is the second international development finance institution to join Zep-Re after the African Development Bank (AfDB) which joined the company in 2011 and currently holds a 13 percent stake in the company.
DEG invests in the private sector in developing and transition countries for purposes of contributing to sustainable growth and improved living conditions of the local population. DEG becomes the 36th investor in Zep-Re. Other shareholders include Comesa member states, various public and private insurance companies operating in the Comesa region, the Eastern and Southern Africa Development Bank (PTA Bank) and the African Development Bank.
Zep-Re, also known as the PTA Reinsurance Company is charged with the task of promoting trade, development and integration within the Comesa region through trade of insurance and reinsurance business.
The reinsurer manages Comesa Yellow Card, a motor vehicle insurance scheme. Comesa Yellow Card also facilitates cross-border movement of vehicles between Comesa member countries meaning transporters and motorists do not have to buy insurance cover at each border post they cross.
Zep-Re also manages the Comesa Customs Bond Guarantee (RCTG) Scheme, a customs transit regime designed to facilitate the movement of goods under Customs seals in the Comesa region and to provide the required customs security and guarantee to the transit countries.
Zep-Re is rated B+ (Good) for financial strength and “bbb-” for issuer credit rating by AM Best Europe as per the rating released in December 2013.
“The outlook for both ratings remains stable. The ratings reflect its strong risk-adjusted capitalisation, solid and consistent operating performance and established competitive position within its regional reinsurance market,” noted AM Best.
The rating agency noted that Zep-Re’s good competitive standing in the southern and eastern regions of Africa is enhanced by its privileged access to business.
“Upward rating pressure could occur if Zep-Re continues to demonstrate profitable growth over the long term whilst maintaining risk-adjusted capitalisation at a supportive level,” it added.
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