African infrastructure and industrial development financing group, the Africa Finance Corporation (AFC), has, in order to strengthen its risk management capabilities, created a new subsidiary company, AFC Captive Insurance Company (AFC Captive). Wholly-owned by the AFC and based on the British Overseas Territory of Bermuda, AFC Captive will also support the continuing expansion of its parent group’s infrastructure financing activities across the continent.

“Africa’s infrastructure needs demand innovative processes that allow us to mobilise more capital and extend financing capacity across the continent,” highlighted AFC president and CEO Samaila Zubairu. “AFC Captive is an important addition to our platform, enhancing our ability to manage risk, deploy capital more efficiently, and scale investment into the infrastructure and industrial projects that will drive long-term growth and economic transformation.”

AFC Captive is supported by up to $30-million in equity capital. At first, it will supply insurance coverage for loans made by the AFC to its counterparties, thereby permitting the group to more efficiently retain and manage risk, while also, over time, reducing its dependence on external commercial insurance markets.

AFC Captive is licensed as a Class 2 insurer, giving it the flexibility to also give insurance capacity to affiliates of the AFC and to certain third parties. Up to 20% of its underwriting capacity will be allocated to such enterprises.

“AFC Captive gives us greater flexibility in how we structure and support transactions across our portfolio,” explained AFC deputy director and syndications head Wola Asase. “By using insurance more strategically, we can expand market capacity, improve capital efficiency and unlock financing for projects that may otherwise be constrained by limited or costly external insurance.”

The AFC group has a strong investment-grade credit profile. This includes an A3 long-term issuer rating from Moody’s, an A long-term and an A-1 short-term issuer credit rating from S&P Global (with a Positive Outlook), and renewed AAA domestic issuer ratings (with stable outlooks) from both China Chengxin International Credit Ratings and S&P Global (China). Taking advantage of this, AFC Captive will seek to establish its own investment-grade credit profile.  

“Beyond strengthening AFC’s internal risk management framework, AFC Captive creates a platform to deepen the Corporation’s insurance expertise and develop tailored risk-mitigation solutions for infrastructure investment across Africa,” reported the AFC. “Over time, this business is expected to expand its offering to a broader range of third-party clients.”