The long-term insurance industry in Namibia in 2018 remained stable, solvent and well capitalised, says the Financial Institutions Supervisory Authority in its 2018 annual report released recently.
Profit before tax
The long-term insurance industry’s profit before tax increased by 20.7% to N$2.4bn ($158m) in 2018. The growth in profit before tax emanated from strong business experienced by the industry during the financial year. Also contributing to the higher pre-tax profit was a 30.4% decline in other expenses, namely to N$136m.
Gross written premium
The gross written premium (GWP) of the long-term insurance industry increased by 7.9% to N$9.8bn in 2018 compared with 2017. The higher GWP resulted from a growth of 7.0% in single premiums and 8.4% in recurring premiums. This movement demonstrates that the industry continues to grow despite the sluggish economic performance experienced in Namibia.
Claims and benefits
In 2018, the industry paid gross benefits to the value of N$7.1bn, which represents an increase of 16.4% in comparison with 2017. This rise in benefits paid was triggered by unfavourable claims experienced, mainly in the life and fund insurance classes of business. Claims in the fund insurance business were mostly attributed to terminations of investment policies, possibly due to consumers liquidating their investments in the context of the economy’s contraction.
The industry’s total assets for the period under review increased by 5.0% to N$56.6bn at 31 December 2018. This is compared with a growth rate of 13.4% in the previous year. This moderate escalation reflects the volatile and declining financial market performances.
The industry’s total liabilities increased by 4.7% to N$47.4bn as at 31 December 2018. The increase in total liabilities mainly resulted from increased policyholder liabilities.
Capital adequacy requirement
The solvency cover ratio during the period under review was 152 times in 2018, increasing from the ratio of 142.5 times reported in the preceding year. These figures indicate that the industry remains well capitalised, financially sound and sufficiently stable to withstand unforeseen adverse market events.
A cover ratio equal to 1 is acceptable for the industry; however, a cover of 1.5 times is preferred.
Long-term insurance players
Although 16 insurers were registered for all classes of insurance business as at 31 December 2018, they only traded in some classes – depending on their risk appetite.
The total number of market participants in the long-term insurance segment rose by 16.9% to 5,863 participants at the end of 2018. Brokers and agents constituted the bulk of these participants, followed by insurers and one dormant reinsurer. No new insurance companies were registered or deregistered during 2018 .