DEG, the German investment and development corporation, has increased its stake in ZEP-RE, an East-African reinsurance company, to 14.93% after investing an additional $14.63m.

Thomas Kronsbein, Vice President Financial Institutions Equity, DEG, said that DEG joined the company in 2014 as a shareholder after investing $15m for a 10% stake.

Commenting on the follow-on investment, Kronsbein said: “Given the strong economic growth and growing middle class in Africa, combined with the continents low insurance penetration, the insurance sector provides significant growth and return potential for insurers and investors.”

“Based on our experience with ZEP-RE, we believe that the company is well prepared to benefit from these growth opportunities and maintain and expand its position as a reliable and high quality local reinsurer,” he told Africa Global Funds.

ZEP-RE is a regional organization charged with the task of promoting trade, development and integration within the COMESA region through trade of insurance and reinsurance business.

The company has been in operation since 1993 and is headquartered in Nairobi, Kenya.

ZEP-RE also operates regional offices in Doula, Cameroon; Lusaka, Zambia; Harare, Zimbabwe and a Retakaful Window in Khartoum, Sudan.

ZEP-RE was established by an agreement signed by the Heads of States and Governments of Angola, Burundi, Comoros, Djibouti, Eritrea, Kenya, Lesotho, Madagascar, Malawi, Mauritius, Mozambique, Rwanda, Somalia, Sudan, Tanzania, Uganda, Zambia and Zimbabwe in 1990 (start of reinsurance operations on January 1st, 1993).

As of today ZEP-RE has 36 shareholders, including Governments as well as state owned and private insurance and reinsurance companies of the COMESA region.

Kronsbein said that ZEP-RE has plans to further diversify its portfolio throughout Africa.

“The investment will be used to strengthen the company’s capital base and finance its strong organic growth path,” he said.

This additional investment by DEG comes at a key and opportune moment for ZEP-RE as it embarks on expanding its business reach and strives to broaden its developmental agenda in line with the mandate vested upon it by countries of the COMESA region, according to Rajni Varia, Managing Director at ZEP-RE.

“This capital will assist the company to build on its operational results realized in 2015 which saw a 10.6% growth in our business underwritten from $125m in 2014 to $138.8m in 2015, 18% growth in shareholders’ funds, 21% increase in total assets and a net realized profit of $19.96m,” he said.

DEG which is A+ rated, is one of Europe's largest development finance institutions and finances investments into private companies in the developing and emerging economies as a means of supporting frameworks that contribute to sustainable economic growth.