Life Reasurers net premium up 13% in 2017…Emeritus Re and FM Re account for 77% of total gross premiums
By Insurance24
HARARE, Emeritus Re, which is still referred as Baobab Re in the IPEC reports accounted for 49% of the $7.7 mln gross premium income for the reinsurance industry in 2017 which increased 4% from $7.4 mln during prior year.
Combined with First Mutual Re, the two reinsures accounted for 77% of the total premiums. According to the IPEC report for the year ended December 2017, there were five reinsures following the additional registration of Grand Re and Sep Re.
“However, for players which were in existence since the beginning of the year under review, there were notable decreases in Gross premium Income (GPI) which could be attributable to increasing retention levels by primary life assurers.
“The decrease in GPI for the three players could also have been triggered by entrance of new players in the market who also carried part of the risk,” said IPEC.
The report notes that Reassurers wrote business amounting to $6.7 million in net premiums compared to $5.9 million in the same period in 2016, increasing 13% attributable to Grand Re and Zep Re coming on board.
The life reassurance business had a combined ratio of 100%, which was mainly attributed to an increase in claims that were not reported on time and had to be settled in the current review period.
Total costs for reassures stood at $6.6 million and underwriting profit was negative $18 thousand and IPEC urges industry to employ cost cutting measures in order to increase profitability.
In terms of compliance in Prescribed Assets, Zep Re and Grand Re reported some negative prescribed asset ratios and only Emeritus Re (Baobab Re), FM Re and FBC Re were fully compliant in terms of the prescribed asset ratio of 7.5%.
In terms of Statutory Instrument 95 of 2017, the current minimum regulatory capital for life reassures is $5 million and for composite reassures is $10 million based on adjusted assets and liabilities as prescribed in the Statutory Instrument.
The total industry net assets or shareholder funds based on unadjusted assets and liabilities amounted to $23.3 million as at 31 December 2017 which is an increase of 9% from $21.4 million in 2016.
“However, it is very important to note that the capitalization levels for all composite life reassures stated in this report are based on their reported assets and liabilities as at 31 December 2017. These figures were not adjusted in terms of Statutory Instrument 95 of 2017 as the information that is needed in adjusting the assets and liabilities were not readily available during the preparation of this report.”
The Commission said it has scheduled a capital verification exercise that will be conducted during the year 2018 to establish the capitalization levels of individual assurers in terms of the aforementioned statutory instrument.
On asset composition and quality, the total assets for reassurers stood at $36.7 million as at 31 December 2017, a 3% increase from $35.7 million as at 31 December 2016.
Equities constituted about 28% of the total investment portfolio whereas liquid assets such as money markets and cash constituted 35% of the total investment portfolio while there was a 72% increase in prescribed asset investment from $1.8 million in 2016 to $3.2 million in 2017.
