Botswana Insurance Holdings Limited (BIHL) told the city this week it continues to look for opportunities to launch its products as the company is in line to be the country’s top diversified financial services company.
The group’s results for the half year results for the period ended 30, June, 2013 showed that a combination of diversification and improving economic environment helped the Botswana Stock Exchange (BSE) listed blue chip grow its top line.
The company has been in a major drive to move the focus from life and asset managementÔÇöwhere it has a sizeable share in the market– to broader financial services which came with the acquisition of Legal Guard from Letshego Holdings and the addition of short term insurer, BIHL Sure.
“It has been a good half despite challenges,” BIHL Chief Executive Officer, Gaffar Hassam said. “We want to defend our market share, but we need to diversify,” he added.
According BIHL half year results, the group’s embedded value grew by 10 percent from P2.7 percent recorded in the prior year to P2.9 billion. Despite the net premium income going down 14 percent from P1.01 billion to P867 million, the top line was impressive as it grew 64 percent from P1.7 billion to P2.9 billion.
The group’s total revenues are almost the P3 billion BIHL registered in 31 December 2012 full year. The fee income grew 29 percent from P43 million to P55.3 million on the back of growth in assets under management, which registered a 11 percent growth from P21.6 billion to P23.9 billion. The operating profit was up 23 percent to P132.6 million and value of new business was flat at P39.2 million.
Hassam said the group aims to deliver sustainable results for its shareholders. “We want to still be here in the next 30- 40 years”.
BIHL also noted good performance from associates where it has exposure and Hassam said they are looking at increasing shareholding in these companies. BIHL has 29 percent exposure in Funeral Services Group (FSG) and 24 percent in Letshego.
FSG, which was a subject of BIHL takeover, distributes the group’s products. Hassan said they still believe in FSG despite botched acquisition overtures. “We indicated to make an offer,” Hassam said, adding that other shareholders were interested in selling while others were holding on to the company. The group’s associates contributed P88 million to BIHL.
BIHL is still a dominant player in the market where its subsidiaries boss competition. The regulator–Non Bank Financial Institutions Regulatory Authority (NBFIRA) says Botswana Life controls 83 percent of the life market, Bifm 60 percent of asset management industry and new kid BIHL Sure already has 3 percent say in the market. These figures are for 2011.
“We still believe we can increase our market share,” said Hassam, adding technology will be key driver. The group, through Bifm, also has investment in Airport Junction, a shopping complex in the north part of Gaborone. The investment gave the group a return on investment.
However, it is concerned about the level of household indebtedness, which leads to increased arrears. Previous surveys by Bank of Botswana and Econsult Managing Director, Dr Keith Jefferis, have indicated that debt levels are high.
A survey this year by Jefferis showed that level of Botswana’s household debt accounts for 17 percent of the country’s Gross Domestic Product (GDP) with the ratio of debt to disposable income increasing from 24 percent in 1999 to 33 percent in 2012.
Jefferis noted that what is striking though is that household debt in Botswana is very short term and in contrast with more developed countries (South Africa) where the majority of consumer borrowing is for mortgages.