LIFE ASSURANCE SECTOR REPORT: Executive Summary

LIFE ASSURANCE SECTOR REPORT: Executive Summary

See report to follow

HARARE, Gross premium written(GPW) for direct life assurance companies for the quarter ended 31 March 2020 stood at ZWL$578 million, representing a nominal increase of 426% from ZWL$110 million reported in the comparative period in 2019.

The increase in GPW for the reporting period was mainly due to significant increase in premiums from funeral and fund business classes. Growth in GPW in the above-mentioned classes was mainly driven by premium increases in response to exchange rate induced inflation.

However, the growth in GPW was below the increase in year-on-year inflation, which stood at 676.39% as at 31 March 2020.

GPW for life reassurers grew by 435% from ZWL$2.1 million reported for the quarter ended 31 March 2019 to ZWL$11.3 million for the quarter ended 31 March 2020.

On inflation adjusted basis the GPW for direct life assurers experienced negative growth of 32.27% from ZWL$109.86 million for the quarter ended 31 March 2019 to ZWL$74.41 million for the quarter ended 31 March 2020.

In real terms the growth in GPW for life reassurers was negative at 31.05% from ZWL$2.12 million reported for the quarter ended 31 March 2019 to ZWL$1.46 million for the quarter ended 31 March 2020.

As at 31 March 2020, nine (9) out of twelve (12) life assurance companies and two (2) of the four (4) life reassurance companies reported capital positions which were compliant with the minimum capital requirements of ZWL$75 million and ZWL$112.5 million respectively.

The capital positions were, however, based on unaudited returns, with no adjustments made for inadmissible assets as required by Statutory Instrument 95 of 2017.

Players are encouraged to hold adequate capital so as to increase resilience to market and economic shocks, which may result in an increase in claims or supply chain disruptions. These shocks may emanate from pandemics such as COVID-19 (Coronavirus).

Adequate capitalisation of the sector is important for a strong insurance sector, for the protection of policyholders’ interests and socio-economic development.

For the quarter ended 31 March 2020, direct life assurers recorded a 55% nominal growth in total assets from ZWL$13.7 billion as at 31 December 2019 to ZWL$21.2 billion as at 31 March 2020.

Growth in assets was mainly attributable to the strong performance by equity investments on the Zimbabwe Stock Exchange.

The asset base for composite reassurers grew by 74.01% from ZWL$190.77 million as at 31 December 2019 to ZWL$331.96 million as at 31 March 2020.

In real terms, both direct life assurers and life reassurers experienced positive growth of 22.66% and 37.46% respectively in their asset bases.

This indicates that growth in assets managed to outstrip the increase in inflation thus protecting the value of their asset portfolios.

As at 31 March 2020, the average prescribed ratio for life assurers and life reassurers stood at 9.90% and 1.16% respectively.