Botswana Insurance Holding Limited (BIHL) Group continues its upward trajectory as evidenced by performance during the financial year ended 31stDecember 2013.
The Group’s operating profit increased by 19 percent to P277.3 million from P232.7 million, with operating profit by the life business alone increasing by 15 percent due to good operational earnings from all the business lines.
Core earnings increased by 15 percent from P270 million to P310 million, while profit attributable to equity holders within the period under review increased by 26 percent to P492.5 million.
BIHL is led by Chief Executive Officer (CEO) Gaffar Hassam. The group’s audited financial results testified to an increase in value for shareholders through stronger embedded value and increased dividends during the period under review.
BIHL embedded value increased by 21 percent from P2,700,868 billion at the end of 2012 to P3,260,161 billion at the end of 2013. This saw a resultant increase in return on embedded value, from 19 percent in 2012 to 24 percent in 2013.
“The embedded value was positively affected by good operating earnings from most of the business lines, especially the life business, and good investment returns which are in line with global market performance for the reporting period,” said Hassam.
He is of the view that increased value for the shareholders is a crucial objective for BIHL Group.
“It is a drive for increased shareholder value that guides all BIHL Group operations and investments as part of our twin strategy towards growth and profitability. The performance of the Group during the period 2013 is a testament to this drive for increased value,” Hassam stated.
The CEO Hassam expressed satisfactory to the BIFM group which he said has generated an excellent set of results for the full year 2013.
He added that it is as a result of growth in assets under management which is linked to the investment team’s enhanced focus on delivering investment performance for our clients, the recurrent inflows from existing clients, as well as the acquisition of new mandates.
“BIHL Sure has taken a conservative approach to building its business, by seeking to insure quality business at realistic prices. This strategy, in a very soft price market, does militate against rapid growth. Though the company is doing well in the retail market, penetration into the commercial lines of business remains a challenge resulting in a loss for the year,” said Hassam.
BIHL Board Chairperson Batsho Dambe-Groth highlighted that on the environment the businesses have been operating in noting that the global growth for 2013 was at 3.2 percent, with the World Bank forecasting it at 3.2 percent in 2014.
Dambe-Groth is of the view that policy makers in major developed economies have generally put growth ahead of austerity to revive the global economy.
She stated that in the domestic market, GDP growth to September 2013 was 5.9 percent, a pick up from 4.9 percent for the year ending June 2013, but way below the 8.6 percent recorded for the year 2010.
“On the favourable side, domestic inflation closed the year 2013 at 4.10 percent, comfortably within the central bank target range of 3 – 6 percent. The bank rate was reduced four times, for a total of 200 basis points during 2013, closing the year at 7.5 percent,” she stated.
She also said that bonds yields have fallen quite sizably during the year, with the longest dated government bond, the 18-year bond, closing the year at 6.25 percent.
“We believe that we are close to the end or at the end of yield compression,” she said.
The BIHL Board has resolved to award a final normal dividend of 35 thebe per share gross of tax.