News

DUE to effects arising from the global economic crisis, the insurance industry recorded investment losses of E77 million during the year ended March 31, 2009. However, these were minimised by investments in interest bearing instruments, which earned the industry E65 million, reducing the overall investment losses to E12.7 million, the Office of the Registrar of Insurance and Retirement Funds (RIRF) reports in its 2009 annual report. Consequently, the industry made a loss of E34 million during the year under review, mainly attributable to the investment losses accompanied by increases in insurance liabilities. “The year under review started with a very unfavourable global economic climate,” notes Registrar Sandile Dlamini in his report. “We saw a continuation of the negativity that had characterised the latter months of 2007.

As we closed the year under review, we saw a continuation of the trend established so firmly in the beginning of the crisis. “Developed equity markets, with continued deleveraging depressing more asset classes, continued to underperform emerging markets. Earnings, particularly in the finance sector, have been collapsing while credit markets generally remain under pressure from weak economic data and earnings reports, and the resulting expectations of rising defaults. “Combined with monetary and fiscal policy stimulus, government initiatives to heal financial markets remain a crucial precondition for any return to growth. Investors are still looking for signs that government rescue plans are taking hold,” Dlamini states.

The report states that a total of E150 million premiums were collected by long term insurers during the year under review, where the most sold class of business was whole life assurance which represented 33.6%, while group life assurance represented 23.6% of the premium income, retirement funds representing 25.4% and other classes representing the remaining 17.4%. “The income statement shows that out of the E150 million premium income, E16 million was ceded to reinsurance companies, which represents only 11% of the premiums and leaves the long term insurers with E134 million net premium income,” reports the Registrar.