ZIMBABWE’S non-life insurers reported a 21,4% growth in total after tax profit to US$7,38 million in the half year to June 30 2013, up from US$6,08 million in the previous comparative period, latest Insurance and Pensions Commission (Ipec) figures show.
In its 2013 second quarter report, Ipec said the increase in profit after tax, on short-term non-life insurers, was mainly attributable to increased levels of business written coupled with increases in unrealised gains emanating from the marking to market of the investment portfolios.
“Although the volumes of profit were on the upward trend the industry average return on equity deteriorated from 14,50% for the half year ended 30 June 2012 to 12,31% for the half year ended 30 June 2013 whilst return on assets remained at 4,33%,” Ipec said.
For non-life reinsurers, total profit after tax amounted to US$5,62m for the half year compared to a negative US$1,72m reported within the same period in 2012 due to an increase in the volume of business and the decrease in operating expenses as well as incurred claims which amounted to US$2,1m and US$1,72m respectively.
Ipec said a total of three non-life insurers namely Tristar Insurance, KMFS Insurance, and Altfin Insurance reported losses during the half year period under review, compared to five insurers that reported losses for the half year to 30 June 2012.
“Notwithstanding the increase in overall profitability, underwriting profits decreased from US$6,60m for the half year ended June 30 2012 to US$5,36m for the period under review. The decrease in underwriting profits was mainly attributable to increases in net incurred claims from US$19,38m for the year to June 30 2012 to US$21,95m for the year to 30 June 2013,” Ipec said.
The report said in line with the increase in net incurred claims, the industry average loss ratio deteriorated from 39,6% to 42,35% while the profitability of the non-life insurers’ core business deteriorated as reflected by a decrease in the underwriting margin from 16,30% for the six months ended 30 June 2012 to 10,35% for the period under review.
Ipec said the deterioration was also reflected in the increase in the industry average combined ratio from 83,70% to 89,65%.
Non-life insurers’ core business of underwriting remained the major source of business with investment income accounting for only 3,77% of net premium written.
Ipec said gross premiums written by direct non-life insurers for the half of the year amounted to US$117,82m, which indicates a 7,56% increase from US$109,53m reported in the comparative period in 2012.