Insurance broker’s earnings increase 81.22%, as Minerva Risk Solutions gross 19.90% of net brokerage commission
By Insurance24
HARARE, Insurance brokers earned $1.4 mln during the quarter ended 30 September 2017, which translate to an 81.22% increase from $77 000 same period in 2016 and this was driven by a 10.01% increase in other income for the quarter.
During the period, there were 32 insurance brokers with only two namely Rainbow Insurance Brokers and Ambassador Insurance Brokers reporting capital positions that were below $100,000.
Industry regulator, the Insurance and Pensions Commission (IPEC) said in its quarterly report that the industry average return on equity (ROE) and return on assets (ROA) for the period ended 30 June 2017 were 11.04% and 4.80% respectively.
Insurance brokers wrote $72.34 million in business and this was 2.67% higher than the $70.46 million reported for the comparative period in 2016. Insurance brokers recorded $11.95 million net brokerage commission since 1 January 2017. This was a 0.55% increase from $11.88 million reported for the nine months ended 30 September 2016.
The total commission translated to an industry average commission rate of 14.86% for the period ended 30 September 2017, a decrease from the 16.57% reported in the second quarter of 2017.
For the period under review, Minerva Risk Solutions, Marsh Insurance Brokers Zimbabwe and HRIB remain the market leaders in terms of both businesses written as well as brokerage income.
Minerva accounted for 20.48% of Gross Premium Receivable and 19.90% of Net Brokerage Commission. Marsh was at 10.81% and 12.15% of GPR and NBC respectively while HRB at 9.12% and 7.47%.
In terms of total assets, Minerva Risk Solutions, Progressive Insurance Brokers, Safari Insurance Brokers and Marsh Insurance Brokers were the market leaders.
Capitalisation
Two insurance brokers namely, Rainbow Insurance Brokers and Ambassador Insurance Brokers reported capital positions that were below $100,000. The capital positions for the insurance brokers ranged from $ 15,175 to $2.37 million
Asset Quality
The asset base for insurance brokers marginally decreased to $29.47 million for the nine months ended 30 September 2017 from the $31.15 million reported in the comparative period of 2016. This was mainly as a result of a decrease in premium receivables from $5.72 million reported at 30 September 2017 to $3.66 million recorded under the current quarter. A further decrease of $0.63 million was witnessed in cash and cash equivalents for the current quarter as compared to the same period in 2016. The asset base for insurance brokers was skewed towards property and equipment, as well as cash and cash equivalents
REINSURANCE
Business Written
Reinsurance brokers reported $58.43 million in gross premium for the nine months ended 30 September 2017 reflecting a decrease of 10.28% from the $65.12 million reported for the nine months ended 30 September 2016. The industry average commission ratio for reinsurance brokers was 23.05% for the quarter ended 30 September 2017, reflecting a 1.55% increase from 21.50% reported for the same period in 2016. All the reinsurance brokers reported capital positions which were above $100,000 as at 30 September 2017.
Asset Quality
Reinsurance brokers reported total assets amounting to $22.97 million for the nine months ended 30 September 2017, reflecting a 23.18% decrease from $29.90 million reported for the same period last year. This decrease was mainly attributed to a decrease in premium receivables from $25.71 million reported as at 30 September 2016 to $0.11 million as at 30 September 2017. The asset distribution for reinsurance brokers included cash and cash equivalents, land and buildings and other assets.
Earnings for Reinsurance Brokers
Total profit after tax for reinsurance brokers decreased by 1.05% from $656,436 for the nine months ended 30 September 2016 to $649,565 for the nine months ended 30 September 2017. This decrease in profit after tax was a result of an 8.09% decrease in premium written and a 16.54 decrease in commissions received for the quarter ended 30 June 2017. The slowdown in growth witnessed in profit after tax was also confirmed by the industry average return on equity (ROE) which fell from 18% as at 30 September2016 to 17.7% as at 30 September 2017. However, return on assets (ROA) increased from 2.55% for the nine months ended 30 September 2016 to 2.83% for the period under review.
Market Share for Reinsurance Brokers
Minerva Re (Private) Limited continues to be the most dominant reinsurance broker in terms of business written, commission generated and total assets.
