The country’s leading insurance company, Botswana Life Insurance Limited (BLIL) says its Khumo 2016 product has performed exceptionally well, delivering a healthy annual return of 7.9 percent in 2015, outperforming other investment options.
In an interview with the SUNDAY STANDARD, the company’s Chief Executive Officer Bilkiss Moorad said despite persisting challenging economic conditions, particularly during the 2007-2008 global economic downturn, Khumo 2016 has been a success as it delivered positive results.
She said the annual return was 7.9 percent in 2015, outperforming comparable products from banks and government bonds, adding that the global financial crisis impacted on returns to policy-holders.
“We are satisfied with the performance of Khumo 2016. Although Botswana Life was not immune to the market volatility, I am satisfied that we weathered the storm and continued to meet our obligations to our valued customers through paying out claims on time,” said Moorad.
She is of the view that investments are by nature unpredictable due to the volatility of market forces which are beyond their control, adding that this is the reason why returns are only ever projected and never guaranteed.
Moorad further stated that a comparative analysis illustrates that post the financial crisis, Khumo 2016 provided superior returns to the rolling 10 year returns of financial markets. She also said the projected annual net returns of 12 percent at inception were in line with the performance of financial markets at the time.
According to the CEO, empirical data shows that prior to the global crisis, the average rolling 10 year returns were 12.5 percent, which demonstrates that the projected net return of 12 percent per annum for Khumo 2016 was achievable given the prevailing economic conditions and performance of financial markets at the time the product was introduced.
“Following the global financial crisis however, 10 year rolling returns have been 5.13 percent, which is lower than the historic average of 10.43 percent and lower than Khumo annual net returns of 7.4 percent,” said Moorad.
She stated that the insurance company which has paid out over P6 billion in claims between 2010 and 2015 and contributed over P16 million to community development since 2008 through various CSI projects, remains optimistic about the performance of its products.
Moorad also explained that the policies which mature this year performed well with an average annual net return of 7.4 percent between 2001 and 2014. She added that in 2015, Khumo outperformed banks by 2.6 percent and government bonds by 4.07 percent by giving an annual return of 7.9 percent, still giving policy-holders a solid return on their investment in the post financial crisis era.
“BLIL is taking steps to strengthen its communication with clients through sms notifications for arrears and policy maturities and will soon start issuing periodical statements to investment and retirement annuity clients,” said Moorad.
Quizzed on the company’s business strategy, Moorad stated that they have rolled out the new five year strategy which is focused on steering the company towards sustained growth. She also said with the implementation of the new strategy now under way, management firmly believes that the company will continue delivering real sustainable growth on all its key performance indicators despite growing competition and muted economic growth.