Zimbabwe’s funeral assurers’ net premium written for the quarter to September 30, 2017 rose by 11 percent to $125,36 million, according to the latest quarterly report by the Insurance and Pensions Commission (IPEC). The stats show that life assurers wrote 76,24 percent of the net written premium while the balance (23,76 percent) was written by 9 direct funeral assurance companies.
Notwithstanding the sector’s overall net premium growth for the period under review, IPEC highlighted that “Growth was mainly driven by a 14 percent increase in premium written by Life Assurers and a 14 percent increase in premium written by Doves Funeral Assurance Company.
“Five companies namely Orchid, First Funeral, Moonlight, Passion and Ruvimbo funeral Assurance Company reported a decrease in net written premium ranging from negative 60 percent to negative 2 percent,” said the regulator.
“Fifty six percent of the funeral assurance industry’s net written premium came from individual life while the remaining 44 percent came from corporate business.
“Volumes in new business continue to be low, accounting for only 5 percent of the industry net written premium while the remaining 95 percent came from recurring business. Players are encouraged to embrace micro insurance by developing products that appeal to the lower end of the market so as to increase their new business.”
During the period, funeral assurers had 103 operational branches manned by a total of 368 staff. The sector’s technical profits decreased by 41 percent (from $4,67 million to $2, 78 million) as compared to the same period in 2016 on the back of “growth of 29 percent in expenses from 50 percent in 2016 to 79 percent in 2017.”
Net profit after tax amounted to $2,94 million. The sector recorded an average return on equity of 7,56 percent and return on assets of 4,49 percent.
“This shows an improved level of profitability as compared to the first half figures of 4 percent and 2,46 percent respectively. The bulk of the earnings in the industry are from the core business, making them high quality earnings,” reported IPEC.
The industry’s assets stood at $65,4 million as at September 30, 2017. These assets are composed of fixed property, money market securities, cash and other investments. On average non-interest generating assets accounted for 84,43 percent of the industry total assets,” highlighted the report.
“This shows a concentration of the industry’s assets in non-interest generating less liquid investments. The funeral assurance industry’s premium debtors to total assets ratio was 14,6 percent which is high compared to 4,6 percent obtained on June 30, 2017. “Players should contain premium debtors so as to maintain a healthy asset structure.”
-Herald
