Botswana Insurance Holdings Limited (BIHL) hinted today it will be focusing its energies on diversification to unlock shareholder value and take financial crisis head on.
At the group results presentation today, the Acting Chairperson of the company that ranks in top five of Botswana Stock Exchange (BSE) listed outfits, Botswana Insurance Fund Management (Bifm) and Botswana Life CEOs said they want to make the group a diversified financial services provider.
“We will be moving more from the life and asset management to broader financial services,” B. Dambe-Groth, Acting BIHL Chairperson, told investors, journalists and stockbrokers at the group results presentations at the GICC.
Bifm CEO Victor Senye added that diversification is playing well with major impact in markets in Zambia although they are finding it tough with the regulators.
“The diversification is important in risk management,” said Senye, adding that they already have successes in Bifm Capital, Khumo Properties and other subsidiaries in Zambia.
“We have statutory capital and if it is managed professionally it can drive the company going forward. We have achieved growth in income in a re-rating market. But diversification has served us well,” said Senye.
He said that growth is expected to come from the diversification drive and added that they had moved into Public, Private Partnerships (PPPs) and investment in property.
Bifm and its consortium recently delivered the P50 million Office of the Ombudsman and the Land Tribunal while, together with another consortium, they are about to deliver the SADC headquarters.
“We need to focus on property development and investment. Currently, we are on Phase 2 of property development at Fairgrounds and we are actively involved in Zambia and recently acquired a commercial property in Livingston,” Senye said, adding they are looking at creating regional property fund.
Meanwhile, Regina Sikalesele-Vaka, CEO of Life Division, revealed that the aftershock of fall out from the global turmoil will be significant although she said they will work on retaining clientele.
She said there is a strong need to diversify in the sophisticated market of 350, 000 active workforce, with the figure under threat because of retrenchments, especially in mines.
The headline project that will attract the attention of policyholders is the one of providing loans and other financial solutions.
“Rather than the policyholders surrendering policies, there could be a solution for that need,” said Regina Sikalesele-Vaka.
It is anticipated that when companies lay off workers, Botswana Life and other insurance companies will experience arrears, lapses and surrenders of individual policies.
But diversification is coming at a price. Already in Zambia, Bifm is finding it hard with empowerment legislations.
Under the Zambian asset management laws, 51% of shareholding in these entities should be held by nationals in line with nationalisation and empowerment.
Senye said they will respect the law although they have objections hinting that they are looking at Plan B if things do not work.
“Bifm has been in Zambia before the legislation. We respect any country to make rules, but it is unconstitutional. We are looking at Plan B of separating our business,” he noted.
“We are not keen with parting with 51%, but if we are going that route, then it results in a capital flow, that is fine. We are putting commercial preposition on the table,” he said.
Currently, Zambians hold 30 percent of African Life Zambia.
According to the BIHL financial results for the year ended 31 December 2008, the net premium income increased by 21% to P958.6 million while the fee income increased by 12% to P123 million from P110 million attributed to investments in Zambia.
The asset under management decreased by 8% to P13. 9 billion due to the financial crisis.