- Only one out of seven assurers was compliant
- Assurers’ capital positions ranged from ZWL$3.42 million to ZWL$75.97 million
- Total assets grew by 30.20%
Harare – Local funeral assurers failed to comply with the regulatory minimum capital requirement in the half year ended 30 June 2020 (HY2020).
A report by the Insurance and Pensions Commission (IPEC) shows that only one out of seven funeral assurers was compliant with the regulatory minimum capital requirement of ZWL$62.50 million as prescribed in Statutory Instrument 59 of 2020.
IPEC attributed the failure to comply to an increase in technical liabilities in line with actuarial recommendations to adjust for future policyholders’ benefits in-line with product specifications, and the need to meet policyholders’ reasonable expectations.
Furthermore, funeral assurers did not have significant investments equities which would have been an appropriate asset class that could have also hedged against inflation.
The non-compliant entities have according to IPEC, submitted capitalisation roadmaps, which are at different stages of implementation.
The capital positions for funeral assurers ranged from ZWL$3.42 million to ZWL$75.97 million as at 30 June 2020.
Funeral assurers’ total assets in the period under review increased by 30.20% to ZWL$605.620 million in absolute terms.
IPEC said the growth was due to an increase in accounts receivables, which more than doubled for the comparable period.
Six funeral assurers reported profit before interest and tax while one reported a loss.
The profit before tax decreased by 80.26% in real terms from ZWL$3. 603 million for the six months ended 30 June 2019 to ZWL$711 360 for the six months ended 30 June 2020.
The decrease was partly due to the decrease in real GPW (which decline by 45.63% to ZWL$6.738 million in inflation-adjusted terms) whilst operating expenses and administration did not decrease at the same rate.
In addition, the decrease also followed the 41.41% decrease in the number of policies written from 236,648 for the six months ended 30 June 2019 to 138,580 for the six months ended 30 June 2020.
Equity Axis News