Thursday, May 23, 2024

Covid-19 depresses BIHL prospects by 5%

Botswana Insurance Holdings Limited (BIHL) says its life insurance business’s net premium income for the first half of 2020 declined by 5 percent from P1.28 billion in 2019 to P1.21 billion.

The Group’s chief executive officer, (CEO) Catherine Lesetedi, last week revealed the decline is due to low new business volumes on single premium income lines.

Also, recurring premium income grew by 10 percent from P712 million in June 2019 to P781 million in June 2020 underpinned by growth in group lines. 

She said recurring premium income line represents a sustainable source of profits in the long term. She also confirmed that the effects of the COVID-19 pandemic have been felt on new business as a result of travel restrictions and lockdown. 

“Total new business written declined by 12 percent on both individual life recurring and single premium income and this was however compensated for by a good product mix with the proportion of risk products increasing compared to prior periods,” said Lesetedi.

She further stated that the value of new business, which represents the present value of future profits from new business premiums written during the period was flat compared to prior year despite the challenging operating environment. 

Meanwhile, Lesetedi stated that operating profit increased by 17 percent from P166 million in June 2019 to P195 million in June 2020, adding that the growth is mainly as a result of good business volumes on group schemes, low claims experience and low new business strain on our retail products.

“As a result of COVID-19 impact, the business accelerated its digitisation projects; these will enable digital and remote selling by agents and brokers, enhanced customer experience by giving customers online capability to access policy information, as well as several options including payment of premiums,” she said.

Lesetedi believes that the economic performance is expected to decline significantly this year due to the COVID-19 pandemic She observed that strict social distancing measures and travel restrictions are expected to negatively impact private consumption, adding that this is likely to continue to be felt in their operations and new business.

On the Asset management business, she stated that BIFM group’s overall Operating Profit in the first half year showed a decline of 12 percent year on year. She said the Botswana business performed well with an 87 percent increase in operating profit before tax driven by higher management fees and lower administration expenses. 

The CEO stated that the higher management fees are largely as a result of higher Assets Under Management which stood at a total of P30.5 billion including P4.2 billion managed by the Zambia group. 

“Zambia business however had a poor first half due to a combination of the Kwacha depreciation and lower investment management fee rates,” she stated.

BHIL Group chairman Batsho Dambe-Groth stated that an award of an interim dividend of 57 thebe per share (net of tax) has been declared. She said the Group remains well positioned in terms of capital management and solvency. 

“The board has confidence in the Group’s ability to maintain dividends at this level while ensuring that its capital position remains solid and aligned with future capital requirements whilst sustaining healthy levels of return on group equity value,” she said.


Read this week's paper