Zim life assurers’ losses increase

BY MISHMA CHAKANYUKA

ZIMBABWE’S life assurance sector after tax loss widened by 156% to $247,7 million in the first quarter of 2019 compared to the same time last year due to a combination of increased net claims coupled with declining investment income, an Insurance Pensions Commission (Ipec) report has revealed.

In its life assurance sector report, industry regulator, Ipec, said the loss position was from $96,8 million, recorded during the same period last year.

“Total profit after tax for life assurers decreased by a huge margin of 156% from a negative $96,8 million for the quarter ended March 2018 to a negative $247,7 million for the quarter ended March 31, 2019. The decrease was mainly as a result of a decline in investment income of $279 million for the quarter ended March 31, 2019 and an increase in net claims of $48,7 million as at March 31, 2019,” Ipec said.

The loss was also driven by an 11,9% surge in total costs from $71,5 million for the quarter ended March 31, 2018 to $80 million for the quarter ended March 31, 2019.

Direct life assurers recorded a 13% increase in Gross Premium Written (GPW) to $109,9 million in the first quarter to March 31, 2019 from $97 million in 2018, the industry regulator said.

On the other hand, life reassurance companies’ GPW grew by 13,42% from $1,870 million reported for the quarter ended March 31, 2018 to $2,121 million for the year to March 31, 2019.

Ipec said the growth in GWP was attributed to an increase in new business generated from annuities business and the group life assurance business, which totalled $24,1 million.

The sector’s total assets decreased by 2% from $3,6 billion as at December 31, 2018 to $3,5 billion as at March 31, 2019 due to the bearish performance by the equities market, which resulted in values of shares going down.

“This decrease was mainly driven by a decrease in the value of equities from $2,2 billion as at December 31, 2018 to $1,8 billion as at March 31, 2019, which was attributable to the bears market on the Zimbabwe Stock Exchange,” Ipec said in the report.

The life assurance industry’s liquidity ratio (current ratio) was 546% as at March 31, 2019, an indication the industry had sufficient near-cash assets to liquidate their short-term contractual obligations, among other short-term costs.

The 2019 National Budget statement increased the prescribed asset ratio from 7,5% to 15% for life assurers, with the industry recording an average prescribed asset ratio of 13,7%.

“Out of the 11 life assurance companies, only one institution was compliant with the minimum prescribed asset threshold of 15%, while three players have ratios that are marginally below the compliance threshold. Players are required to comply with the new prescribed ratio. Compliance is mandatory and the commission will take appropriate punitive measures on all non-compliant institutions,” read the report.

Total claims incurred by the life assurance sector for the quarter improved by 7,55% to $48,747 million.

During the period, the life assurance industry was made up of 11 life assurance entities and nine of them reported capital positions which were in compliance with the prescribed minimum capital requirements of $7,5 million for composite insurers. The industry reported 6 040 policies with a total gross premium of $143 000, which were not taken up during the quarter.

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