Non-life insurers profit jumps 52pc

Golden Sibanda Senior Business Reporter
NON-LIFE insurers’ profit after tax jumped 52,34 percent to $16,34 million in the 12 months period to June 30, 2018 compared to the same comparative period the prior year, according the Pensions and Insurance Commission (IPEC)’s second quarter report for 2018 released this week.

However, IPEC reported that total profits after tax for the non-life reinsurers decreased slightly from $5 million for the half year ended June 30, 2017 to $ 4,8 million for the half year ended 30 June 2018.

Total Gross Premium Written (GPW) by non-life insurers amounted to $144,18 million for the half year to June 2018, reflecting a 15,44 percent increase from $124,9 million reported for the comparative period in 2017.

“The increase in total profit after tax was mainly attributable to an increase in Gross Premium Written . . . coupled with a decreased usage of reinsurance as evidenced by an increase in the retention ratio reported,” IPEC said.

There was an increase in underwriting result from $6,6 million for the quarter to 30 June 2017 to $14,81 million. This translated into an improvement in the industry average loss ratio from 48,1 percent for the half-year ended June 30, 2017 to 40 percent for the quarter under review. The industry average combined ratio for non-life insurers also improved from 90,07 percent for the half year ended June 30, 2017 to 83,57 percent for the period under review.

The industry’s average return on assets (ROA) and return on equity (ROE) was 7,39 percent and 14,86 percent for the period under review. As at June 30, 2017, ROA was 5,29 percent and ROE 11,20 percent.

Cash and near-cash assets in the form of money market and short term prescribed assets increased from $61,56 million as at 31 March 2018 to $66,17 million as at June 30, 2018.

The net effect was an increase in the acid test ratio from 55,41 percent as at March 31, 2018 to 60,36 percent as at June 30, 2018.

“Given the prevailing acute foreign currency shortages in the formal market, investment of assets in liquid assets may expose the insurers to the vagaries of inflation emanating from volatile parallel market exchange rates. The acid test ratio for individual insurers as at June 30, 2018 ranged from 1,65 percent to 631,17 percent.”

Old Mutual Insurance, Zimnat Lion and Nicoz Diamond were the market leaders in terms of GPW with a combined market share of 42,59 percent.

The non-life insurance industry reported a 4,79 percent increase in total technical liabilities from $67,44 million as at March 31, 2018 to $70,67 million as at June 30, 2018.

Although the average liquid assets to total technical reserves ratio of 92,43 percent as at 30 June 2018 was below the idle 100 percent, the industry was still considered to be holding sufficient liquid assets to back its technical liabilities.

“Notwithstanding the recorded industry’s average liquid assets to reserves ratio, some insurers reported ratios which were significantly below 100 percent, indicating that their reserves were not backed by liquid assets,” IPEC said.

A total of sixteen (16) out of twenty (20) insurers reported capital positions which were above $2,5 million as at June 30, 2018. IPEC said that the reported capital positions for non-life insurers were computed without accounting for non-admissible assets as stipulated in Statutory Instrument 95 of 2017.

Total assets for non-life insurers decreased marginally from $258.43 million reported as at March 31, 2018 to $256,77 million reported as at June 30, 2018. IPEC said the decrease in total assets during the quarter under review is in tandem with trends noted during the same period over the years.

Source: The Herald

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