{"id":195430,"date":"2026-03-16T12:30:07","date_gmt":"2026-03-16T12:30:07","guid":{"rendered":"https:\/\/www.reinsurancene.ws\/?p=195430"},"modified":"2026-03-16T10:36:41","modified_gmt":"2026-03-16T10:36:41","slug":"fitch-downgrades-arcs-ratings-on-sustained-earnings-volatility","status":"publish","type":"post","link":"https:\/\/www.reinsurancene.ws\/fitch-downgrades-arcs-ratings-on-sustained-earnings-volatility\/","title":{"rendered":"Fitch downgrades ARC&#8217;s ratings on sustained earnings volatility"},"content":{"rendered":"<p>Fitch Ratings has downgraded African Risk Capacity (ARC Ltd.)\u2019s Insurer Financial Strength (IFS) Rating to \u2018BBB+\u2019 from \u2018A-\u2019 and its Long-Term Issuer Default Rating (IDR) to \u2018BBB\u2019 from \u2018BBB+\u2019, reflecting a decline in the firm\u2019s standalone credit quality, which has been revised to \u2018bb+\u2019 from \u2018bbb-\u2019.<\/p>\n<p><img loading=\"lazy\" decoding=\"async\" class=\"alignright wp-image-170798\" src=\"https:\/\/www.reinsurancene.ws\/wp-content\/uploads\/2025\/02\/african-risk-capacity-arc-logo.png\" alt=\"african-risk-capacity-arc-logo\" width=\"360\" height=\"210\" srcset=\"https:\/\/www.reinsurancene.ws\/wp-content\/uploads\/2025\/02\/african-risk-capacity-arc-logo.png 1200w, https:\/\/www.reinsurancene.ws\/wp-content\/uploads\/2025\/02\/african-risk-capacity-arc-logo-300x175.png 300w, https:\/\/www.reinsurancene.ws\/wp-content\/uploads\/2025\/02\/african-risk-capacity-arc-logo-1024x597.png 1024w, https:\/\/www.reinsurancene.ws\/wp-content\/uploads\/2025\/02\/african-risk-capacity-arc-logo-768x448.png 768w, https:\/\/www.reinsurancene.ws\/wp-content\/uploads\/2025\/02\/african-risk-capacity-arc-logo-200x117.png 200w, https:\/\/www.reinsurancene.ws\/wp-content\/uploads\/2025\/02\/african-risk-capacity-arc-logo-100x58.png 100w\" sizes=\"auto, (max-width: 360px) 100vw, 360px\" \/>The revision of the parametric insurer&#8217;s standalone credit quality is reportedly due to sustained earnings volatility, which has left its capital position vulnerable to potential losses.<\/p>\n<p>Fitch assessed ARC Ltd.\u2019s financial performance and earnings as \u201cweak,\u201d noting that droughts and extreme weather events across the continent contributed to a net loss of $38 million at end-2024, with a combined ratio of 180%.<\/p>\n<p>However, the insurer\u2019s net income rebounded to $21 million in the first nine months of 2025.<\/p>\n<p>Fitch has cautioned that ARC Ltd.\u2019s earnings are likely to remain volatile due to the nature of the risks it underwrites, though reinsurance is expected to help limit net exposure to losses.<\/p><div class=\"reins-in-every-article\" id=\"reins-272823820\"><div id=\"reins-3368091294\" style=\"margin-bottom: 10px;\"><a data-no-instant=\"1\" href=\"https:\/\/www.artemis.bm\/dashboard\/cat-bond-ils-market-statistics\/\" rel=\"noopener\" class=\"a2t-link\" target=\"_blank\" aria-label=\"Artemis catastrophe bond market charts and visualisations\"><img loading=\"lazy\" decoding=\"async\" src=\"https:\/\/www.reinsurancene.ws\/wp-content\/uploads\/2026\/02\/new-artemis-cat-bond-charts-dashboard-728x90-banner.jpg\" alt=\"Artemis catastrophe bond market charts and visualisations\"  srcset=\"https:\/\/www.reinsurancene.ws\/wp-content\/uploads\/2026\/02\/new-artemis-cat-bond-charts-dashboard-728x90-banner.jpg 1456w, https:\/\/www.reinsurancene.ws\/wp-content\/uploads\/2026\/02\/new-artemis-cat-bond-charts-dashboard-728x90-banner-300x37.jpg 300w, https:\/\/www.reinsurancene.ws\/wp-content\/uploads\/2026\/02\/new-artemis-cat-bond-charts-dashboard-728x90-banner-1024x127.jpg 1024w, https:\/\/www.reinsurancene.ws\/wp-content\/uploads\/2026\/02\/new-artemis-cat-bond-charts-dashboard-728x90-banner-768x95.jpg 768w, https:\/\/www.reinsurancene.ws\/wp-content\/uploads\/2026\/02\/new-artemis-cat-bond-charts-dashboard-728x90-banner-200x25.jpg 200w, https:\/\/www.reinsurancene.ws\/wp-content\/uploads\/2026\/02\/new-artemis-cat-bond-charts-dashboard-728x90-banner-100x12.jpg 100w\" sizes=\"(max-width: 1456px) 100vw, 1456px\" width=\"728\" height=\"90\"   \/><\/a><\/div><\/div>\n<p>The rating agency also highlighted ARC Ltd.\u2019s business profile, noting its specialist role as a parametric insurer for African sovereigns and its relatively small size.<\/p>\n<p>Fitch added that the firm&#8217;s strong track record of claims payments, along with improvements in product diversification and risk pooling, strengthens its franchise and supports the agency\u2019s overall assessment of its company profile.<\/p>\n<p>According to Fitch, the ratings continue to reflect the commitment and credit quality of ARC Ltd.&#8217;s sponsors.<\/p>\n<p>Fitch has applied an uplift of three notches from ARC Ltd.&#8217;s standalone credit quality of \u2018bb+\u2019, reflecting its assessment of the sponsors&#8217; willingness and ability to support the insurer, underpinned by the firm&#8217;s development objectives.<\/p>\n<p>Fitch continued, &#8220;The uplift is driven in particular by our assessment of a strong willingness to support despite ARC Ltd.&#8217;s volatile profitability.<\/p>\n<p>&#8220;ARC Ltd. is sponsored by the German development bank KfW through the Federal Ministry for Economic Cooperation and Development (BMZ) and by the UK Foreign, Commonwealth &amp; Development Office (FCDO).<\/p>\n<p>&#8220;KfW\/BMZ and the FCDO also oversee ARC Ltd.&#8217;s governance and development strategy, while also facilitating sovereign participation in the business through premium subsidy schemes.<\/p>\n<p>&#8220;Fitch expects further capital support to be made available as ARC Ltd. continues to achieve its development goals.&#8221;<\/p>\n","protected":false},"excerpt":{"rendered":"<p>Fitch Ratings has downgraded African Risk Capacity (ARC Ltd.)\u2019s Insurer Financial Strength (IFS) Rating to \u2018BBB+\u2019 from \u2018A-\u2019 and its Long-Term Issuer Default Rating (IDR) to \u2018BBB\u2019 from \u2018BBB+\u2019, reflecting a decline in the firm\u2019s standalone credit quality, which has been revised to \u2018bb+\u2019 from \u2018bbb-\u2019. The revision of the parametric insurer&#8217;s standalone credit quality [&hellip;]<\/p>\n","protected":false},"author":18,"featured_media":170798,"comment_status":"closed","ping_status":"closed","sticky":false,"template":"","format":"standard","meta":{"_acf_changed":false,"_monsterinsights_skip_tracking":false,"_monsterinsights_sitenote_active":false,"_monsterinsights_sitenote_note":"","_monsterinsights_sitenote_category":0,"jetpack_post_was_ever_published":false,"_jetpack_newsletter_access":"","_jetpack_dont_email_post_to_subs":false,"_jetpack_newsletter_tier_id":0,"_jetpack_memberships_contains_paywalled_content":false,"_jetpack_memberships_contains_paid_content":false,"footnotes":"","jetpack_publicize_message":"","jetpack_publicize_feature_enabled":true,"jetpack_social_post_already_shared":true,"jetpack_social_options":{"image_generator_settings":{"template":"highway","default_image_id":0,"font":"","enabled":false},"version":2}},"categories":[1],"tags":[1843,123,238],"class_list":["post-195430","post","type-post","status-publish","format-standard","has-post-thumbnail","hentry","category-news","tag-arc-ltd","tag-fitch-ratings","tag-parametric-insurance"],"acf":[],"yoast_head":"<!-- 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