THE two reassurance companies in the country, First Mutual and Baobab, have underwritten $6 million in net premiums for the year ended December 31 2014 up from $5 million in 2012, the Insurance and Pensions Commission (IPEC) has said.
Reassurance is the contract made between an insurance company and a third party to protect the insurance company from losses.
The reinsurer is the third party or the company issuing the reinsurance policy.
According to a recent IPEC report, the underwritten $6 million in net premiums was a 16% growth from the previous year.
In the period under review, gross premiums grew by 18% to $7,1 million from $5,9 million in 2012.
Net claims grew by 46% to $2,7 million from $1,9 million in 2012.
Net commission incurred increased by 19% to $1,5 million for the year ended December 31 2013 as compared to $1,3 million in 2012.
“For the current reporting period, cost grew by 28% while net premium inflows grew by 16% to $6 million. This imbalance resulted in a $79 000 underwriting profit and a combined ratio of 99%,a 10% increase from the same period last year,” the report reads.
In the period under review management expenses grew by 43% to $1,5 million from $1 million in 2012 and under writing profit declined by 85% to $79 000 from $527 000 in 2012.
IPEC said the cost distribution was made up of claims of 48% which contributed $3 million. Commission was 27% contributing $2 million of the costs and management expenses were at 25% and contributed $1 million.
In the period under review, IPEC said both reinsurers were on course to full compliance with the new minimum capital requirements in line with Statutory Instrument 21 of 2013.
“The industry reported a current ratio of 795% and a capital to liability ratio of 37%. In the medium to long term, players may be expected to hold capital which matches their liabilities in line with emerging best practices,” IPEC said.