Case Study: African Risk Capacity achieves accurate drought catastrophe modelling and sustainable reinsurance pricing with Palisade's @RISK

ARC Ltd uses @RISK to Inform Catastrophe Insurance Risk Pool in Africa

African Risk Capacity (ARC Ltd), Africa’s first sovereign catastrophe insurance risk pool, needed to quantify and price drought risk across multiple countries and to test its long‑term financial resilience. To support portfolio-level reinsurance decisions and capital planning, ARC Ltd has used Palisade’s @RISK software since 2013 to model extreme drought losses, capture tail risk, and translate satellite‑based drought indices into estimated response costs for pricing and underwriting.

Palisade’s @RISK was used to fit loss distributions, define correlations across country exposures, and run large Monte Carlo simulations (from quick 1,000‑iteration checks up to 10,000–20,000+ iterations) to produce portfolio exceedance probability (EP) curves and dynamic financial analysis outputs. Those simulations enabled ARC Ltd to set reinsurance attachment levels, calculate accurate reinsurance pricing, assess capital adequacy over multi‑year horizons (including probability of survivability and shareholder equity distributions), and stress different pricing, reinsurance and growth scenarios—delivering measurable improvements in pricing accuracy and long‑term financial planning.

African Risk Capacity