44 OUR PRIORITIES Product diversification A larger sovereign and non-sovereign customer base is critical to ensure our sustainability. We have diversified into floods, and outbreaks and epidemics, which will assist with expanding our business. While sovereign payouts provide urgent liquidity when disasters strike, they cannot match a country’s full liquidity requirements. Hence, developing market-led solutions helps us transfer some of the risk from governments to in-country private insurers, which reduces the risk profile of these governments. Complementary offerings such as contingency funds and catastrophe bonds would boost client confidence and support growth. Market growth Limited pool participation remains a challenge and threatens our financial viability. The size of our market is another barrier to growth. We currently have 39 member states, and the African Union has a finite 55 countries. We continually explore ways to simplify or amend the onboarding process for countries to join the sovereign or non-sovereign risk pool. Analysing risks and material issues uncovered three priority areas for achieving our vision: To achieve these, raising additional capital from potential stakeholders remains a focus area and ensures our sustainability as we scale up. Premium funding A barrier to pool participation remains affordability. ARC Ltd.’s strategy for premium financing includes identifying and securing additional donor partners. More partnerships offer the potential to expand the market and are vital to growing our business. We are also aware that our market could be significantly reduced due to competing products and the Word Bank offering guaranteed funding. This makes sourcing new donor partners and securing premium financing all the more important. At the same time, ARC Ltd. is driving the expansion of our Replica partners, and towards the end of 2023, we welcomed the UN Refugee Agency on board. While not an immediate concern, donor capital recalls due to unmet developmental targets from ARC Ltd.’s side remain a further risk and would render our business unsustainable. Our interest-free capital loans are set to mature in 2034. Another keypriority iscapital funding. The increased frequency and impact of climate events, leading to high payouts, pose a risk of capital erosion. ARC Ltd. is continuously and actively engaging with donors to build the foundations for supporting capital needs. PRODUCT DIVERSIFICATION MARKET GROWTH PREMIUM FUNDING OUR PR I OR I T I ES
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