ZSE Bull run buoys Life assurer’s assets base
HARARE, Total industry assets for life assurers and assets supporting life reassurance surged 6, 47% to stand at $2,80 billion as at 30 September 2018 from $2,64 billion reported as at 30 June 2018, the Insurance and Pensions Commission (IPEC) says in its quarterly report.
This was on the back of the significant rise in value of equities which was witnessed on the back of the Bull Run on the Zimbabwe Stock Exchange, which also resulted in more funds being channeled towards this asset class.
In its 2018 Q3 report, Ipec said the total prescribed assets investments reported by life assurers and composite reinsurers as at 30 September 2018 were $322,22 million and $3,28 million respectively.
“This translated to industry average prescribed asset ratio for life assurers and composite reinsurers of 11,66% and 8,01% respectively during the period which was above the required minimum prescribed ratio of 7,5%.”
Gross Premium Written (GPW) for life assurers for Q3 2018 also surged 13,06%to $301 million, reflecting from $266 million comparable period in 2017 driven by a strong growth in funeral assurance business and fund business as clients’ tastes shift.
On the other hand, composite reinsurers reported a 17,4% GPW growth of to $6, 91 million during the period under review, from $5,88 million reported for the nine months ended 30 September 2017.
Ultimately, the Life assurers’ industry average retention ratio stood at 98,49% during the period , indicating a low reinsurance uptake by the sector.
During the period a total of 3 out of 11 operating life assurance companies reported capital levels, which were below the minimum required capital of $5 million, as at 30 September 2018.
The regulator said these undercapitalised players should put in place comprehensive recapitalisation plans and would be closely monitoring the progress.
Out of the five registered composite reinsurers, a total of four composite reinsurers reported capital levels above the minimum required capital of $7,5 million.
“Although the capital reported by Zep Reinsurance Company’s local office is below the minimum regulatory requirement, the local office is backed by its parent company in Kenya with a capital level in excess of $100 million.
The life assurance industry reported total profit after tax of $314,85 million for the nine months ended 30 September 2018, a decrease of 67,85% from $979.27 million reported for the comparable period in 2017,” said Ipec.
The significant drop in profit was as a result of a drop in investment income from $934.09 million to $253.87 million for the 9 months to 30 September 2018.
Net profit after tax reported by composite reinsurers for life reassurance business stood at $1,08 million, a decrease of 9.57% from $1,19 million reported for the same period in 2017buoyed by significant capital gains reported.
Total claims incurred by the life assurance industry amounted to $131,99 million, a decrease from $141,59 million for the comparable period in 2017.
Composite reinsurers also reported a decline of 9,53% in net incurred claims to $2,52 million from $2,78 comparable period.
The regulator said in the wake of current challenges which includes multi-tier pricing system and rising inflation, players should be innovative and develop products that appeal to the changing needs of both current and prospective policyholders.
“The Commission also encourages players to increase their presence in the micro insurance space in line with the broader national financial inclusion strategy,” said Ipec.
