AM Best has revised the outlooks to stable from negative for Société Tunisienne de Réassurance (Tunis Re), a reinsurance company based in Tunisia.
The credit rating agency also affirmed the company’s Financial Strength Rating of B (Fair) and the Long-Term Issuer Credit Rating of “bb” (Fair).
According to AM Best, the ratings reflect Tunis Re’s balance sheet strength, which it categorizes as strong, alongside adequate operating performance, a limited business profile, and marginal enterprise risk management.
The change in outlook is based on expectations that the company’s core rating fundamentals will remain steady despite ongoing economic, political, and financial challenges in Tunisia. The revision follows a prior downgrade to a negative outlook in June 2024, which AM Best attributed to pressures stemming from Tunisia’s macroeconomic environment.
At the time, concerns were raised about how heightened country risk could undermine the reinsurer’s balance sheet and operating resilience.
Tunis Re’s balance sheet strength is supported by risk-adjusted capitalization, as measured by Best’s Capital Adequacy Ratio (BCAR), which stood at the strongest level at year-end 2024. AM Best anticipates this capitalization level will continue, aided by organic capital generation, although offset by what it describes as a relatively heavy dividend distribution.
The assessment also takes into account Tunis Re’s conservative allocation across asset classes and the high concentration of its investment portfolio within Tunisia, where over 95% of its invested assets are held, consistent with local regulatory mandates.
Over the past few years, however, the company’s capital buffer above regulatory thresholds has narrowed. This trend reflects increasing investment risk, particularly as domestic financial market volatility has created uncertainty over the long-term quality of certain assets.
AM Best noted that Tunis Re has demonstrated adequate operating performance, with a five-year (2020–2024) weighted average return on equity of 8.2%. Investment income remains the primary contributor to earnings, with a five-year weighted average net investment return of 7.8%, including gains and losses.
The company’s underwriting operations produced technical profits in its non-life segment, resulting in a five-year weighted average combined ratio of 96.0%. These figures are largely in line with performance recorded between 2019 and 2023, when the company posted an average ROE of around 7.6% and a comparable net investment yield.
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