AFC's Bermuda captive keeps loan risk in-house

Africa Finance Corporation has set up a Bermuda captive, AFC Captive Insurance Company, as a wholly owned subsidiary with up to $30 million in equity, the Royal Gazette reports, and pointed the class 2 insurer first at its own loan book. The corporation says the structure lets it retain risk more efficiently while reducing reliance on external commercial insurance over time.

The captive has a third-party door, but it is narrow. Up to 20 per cent of underwriting capacity can go to AFC affiliates and selected outside clients, with a longer-term ambition to serve more of them. Wola Asase, deputy director and head of syndications, manages the subsidiary as head of AFC Captive and sits on its board. President and chief executive Samaila Zubairu said the captive improves the group's ability to manage risk, deploy capital and scale investment in infrastructure and industrial projects.

The structure lands against an A3 long-term issuer rating from Moody's and an S&P Global long-term A and short-term A-1 issuer rating with a positive outlook in January 2026. It also has renewed AAA domestic issuer ratings with stable outlooks from China Chengxin International Credit Rating and S&P Global (China) Ratings. Those are parent-level ratings, and AFC Captive intends to build its own investment-grade credit profile as scale develops. AFC, founded in 2007, now counts 48 member countries and has invested more than $19 billion across 36 African countries.

Asase's description of the rationale points to market access as much as price: insurance used strategically can expand capacity and unlock projects constrained by limited or costly external cover. A captive lets a balance sheet act as its own insurer, at least until the risk exceeds its appetite.

The 20 per cent cap makes the company's priorities clear: AFC has created a risk-retention tool that can later sell capacity, and capped that capacity before it ever wrote a policy. Retention only beats the market when the cost of holding risk is lower than the price an external insurer charges, and the captive's own claims experience will settle that. If the arithmetic works, other African lenders with long infrastructure books will face the same temptation to internalize their risk, and Bermuda is where the copycats will show up. For now, an equity allowance of up to $30 million sizes this as a disciplined pilot rather than a capital-market event.