Business booming for short-term insurers but four in the red

Zimbabwe’s short-term insurers enjoyed profit growth in the first quarter of the year, aided by a decrease in uptake of reinsurance, the latest report by the industry regulator shows.

Total profit after tax for non-life insurers increased by 9.07 percent from $3.59 million for the quarter ended March 31 last year to $3.92 million this year.

“The increase in profit after tax was mainly attributable to a decrease in the uptake of reinsurance which amounted to $2.31 million coupled with a decrease in net incurred claims and improved investment returns, which amounted to $0.51 million and $0.36 million,” the Insurance and Pensions Commission (Ipec) said in the 2015 first quarter report.

The total profit after tax reported by non-life insurers translated into a return on assets and return on equity of 2.16 percent and 5.05 percent respectively.

Ipec noted that although the total profit for the industry improved, four insurers – Allied, Champions, Cell Insurance and Credsure – reported losses during the quarter under review.

“The number of insurers who reported losses compare favourably with a total of nine reported for the comparative period in 2014. There were no significant changes in the profitability of the non-life insurers’ core business with underwriting profits decreasing marginally from $3,76 million for the quarter ended March 31,2014 to $3.60 million for the quarter under review,” Ipec said.

A comparison of the underwriting profits for the quarter under review ($3.60 million) with total profit after tax for the same period ($3.92 million) indicates that non-life insurers generated the bulk of their profits from underwriting.

Ipec noted that the volume of business written by non-life insurance companies remained largely unchanged with a negligible decrease of 0,45 percent in total Gross Premium Written (GPW) from $71.21 million last year to $70.89 million this year.

“The dampened growth in the business written by insurers is attributable to the economic hardships that were being experienced during the quarter under review,” Ipec said.-The Source

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