The Botswana Insurance Fund Management (Bifm) blazed the trail in its half year results as assets under its management shot-up by more than 30 percent from P 11.8 billion while at the same time signaling a strong future thanks to its PPP projects.
According its full year results to June 30, 2007 the fund reached P 15.4 billion which was partly attributed to the input made by its strategic partners, such as BlackRock, and the technical support from Sanlam.
Bifm’s Chief Executive Officer and the co-CEO of the Botswana Insurance Holding Limited (BIHL), Victor Senye, said the six month period was marked by acquisition of good assets in relation to budget, and above benchmark returns on funds managed by the company. Hence, there has been a realization of “good value for share holders.”
However, he stated that competitive landscape still prevails.
“We are experiencing on-going pressure on fees and product innovation which is still critical,” he stated.
He said despite the challenges, Bifm managed to experience growth in income and headline earnings and also managed to keep their expenses under control.
According to Senye, the technical relationship with BlackRock and the support of Sanlam continue to provide Bifm with a truly powerful regional and global presence that demonstrated commitment and value to its clients.
The company, he said, will focus on retention, growth and efficiency as it builds up the muscle to be part of Botswana’s growth by giving a helping hand in infrastructural projects as well as privatization.
“We also would like to look at diversification and risk management so as to move forward,” he said.
Regina Vaka, Chief Executive Officer of Botswana Life Insurance Limited (BLIL) and BIHL said her organization is experiencing an upturn in its performance following the restructuring plan commonly known as Tsosoloso. As results of that premium income was 11 percent better to P379.8 million compared to the corresponding period. The restructuring process included a more client-centric model with increased emphasis on client service delivery through the extensive branch network.
“Operational efficiencies have improved service delivery resulting in higher client retentions as seen from the steady decline of the lapses, and this is expected to continue into the latter half of the year,” she stated.
The entire insurance industry has been under a serious whack due to policies cancellation- made worse by hard economic hardship that were compounded by the pula devaluation.
Operational efficiency has leap-frogged the performance of the business which had added new clients under the period under review. Volumes shot-up 14 percent up on last year to P49 million whilst operating expenses were contained resulting in unit costs being maintained at the same level.
“BLIL is actively pursuing other distribution channels to compliment the existing ones so as to increase future sales,” she added.
However, annuity business slouched down by 15 percent business to P134.9 million. Though is the case, she said this is compensated by the retention of large corporate clients as well as acquisition of new group life schemes.
BLIL market dominance has moved from 70 to 80 percent despite the challenges thanks to the new products which have been launched.
Earnings for BHIL were 29 percent up leading to operating surplus to the value of P116 million. Total surplus after tax is 190 percent which is to the value of P321.4 million.
BIHL has found an embedded value of P1.7 billion which is an increase of 26 percent from December 2006. Return embedded value per share stood at 24 percent. In value of new business, BIHL obtained P37.1 million which showed an increase of 67 percent. Further, he said in solvency, capital adequacy requirement were in multiples of 8.2 times which is an increase from 7.5 times attained at December 2006.
Net investment surplus stood at P282.5 million compared to P23.9 million in 2006 reflecting stronger market performance for the six month which has just ended.
Josh Wrench, who is BIHL member, pointed out that BIHL investment returns significantly exceed long-term assumptions. “The benefit is from higher management fees during the period and also in future because we start from a higher asset base,” he said. He said their investment returns allows release of greater negative reserves. Changes in assumptions and methodology have shown that inflation had been reduced and also appears to be stabilizing. Expenses of December 2006 include P17.6 million from share option costs. “Lapses and surrenders showed that assumptions weakened in light of good experience,” he stated.