WINDHOEK – During the last three months of 2014, the long-term insurance industry’s asset base continued to strengthen as it increased by 2.8 percent ahead of additional strain of 2.4 percent increase in liabilities.
According to the Namibia Financial Institutions Supervisory Authority (Namfisa), excess assets over liabilities were N$4.6 billion as at December 2014, increasing by 7 percent from N$4.34 billion recorded at the end of the third quarter in 2014.
In its latest Quarterly Statistical Bulletin, which provides statistical analysis on the industry as well as supervisory developments during the three-month period ending on December 31, 2014, the authority reports that total assets recorded for the quarter under review was N$40.2 billion, increasing slightly by 2.8 percent from N$39.1 billion reported as at the end of the third quarter. “The increase could be attributed to the majority of insurers which experienced an average increase of 9.5 percent growth in total assets while two large insurers experienced a decline of 2.5 percent. Of the total investments 47.7 percent of the assets were held in Namibia as at December 31, 2014.
Policyholder liabilities were N$33.9 billion as at the end of the quarter, increasing by 2.4 percent from N$33.1 billion reported in the previous quarter. The gross premium income recorded for the long-term insurance for the fourth quarter was N$2.4 billion, increasing by 33.3 percent from N$1.8 billion recorded in the third quarter of 2014,” states the quarterly report.
The report further states that total gross policyholder claims paid during quarter four of 2014 totalled N$1.6 billion from N$1.0 billion reported in third quarter of 2014, translating into a 60 percent increase in value of claims made by policyholders. Namfisa reports that expenses increased from N$358 million reported in the third quarter to N$473 million observed by the end of the fourth quarter in 2014, reflecting a 31.9 percent increase. “This overall increase in expenses is mainly attributed to the increase in management expenses recorded at 65.6 percent and the increase in commission paid observed at 20.8 percent for the quarter,” reads the report.
The Quartlery Bulletin also discloses that the short-term insurance industry’s financial position was measured at a solvency ratio of 28 percent as at the end of the fourth quarter of 2014. Namfisa says this solvency ratio remains sufficient and total liabilities were covered 1.4 times by total assets as at December 31, 2014.
Furthermore, the report’s Executive Summary states that the total assets of the Medical Aid Industry increased from N$1.1 billion as at September 30, 2014, to N$1.2 billion as at December 31, 2014, representing a growth of 8.6 percent. “The gross contributions received increased marginally by N$2.7 million to N$668.5 million for the quarter ended December 31, 2014. On the other hand, total liabilities declined by 2.9 percent to N$264.2 million for the quarter ended December 31, 2014, with all but one category of liabilities falling,” states the report.
Namfisa elaborates that the total membership of registered medical aid funds increased over the quarter by 3 558 members to 179 364 as at December 31, 2014. “However, some closed funds reported a reduction in membership due to the retrenchment of employees, the turnover of staff and the non-affordability of contribution premiums.”
Meanwhile, pension funds, who submit data on an annual basis, contributions received for the year ending December 2014 were up by 27.5 percent while fund expenses also increased by 24.5 percent compared to the prior year. The total membership (pensioners and active members) for pension funds increased by 22.4 percent for the year. The Authority reports that pension fund assets increased by about 13.6 percent to N$119.6 billion at the end of year 2014.
Also, Collective Investment Schemes (CIS) shows that total Assets under Management (AUM) increased by 2.6 percent to N$42.6 during this quarter in comparison to the previous quarter. Assets invested in the Namibian markets were N$19.9 billion or 47.2 percent of total assets, a decrease of 0.7 percent from the previous quarter. Investments in the Common Monetary Area (CMA) increased by 0.9 percent while offshore investments increased by 2.2 percent during the period under review.
“The assets under management of the approved investment managers increased by 3.2 percent to N$136.2 billion as at end of quarter four of 2014. This growth in assets can be attributed to capital growth and new inflows from investors. Pension funds, which made up 57.1 percent of the assets, contributed 5 percent to the growth. Collective investment schemes (CIS) and long-term insurers added 2.8 percent and 1.4 percent, respectively,” states the report.
Namfisa administers a number of laws which give birth and guidance to the supervisory and regulatory activities across industries that include insurance (both short-term and long-term), retirement funds, medical aid funds, friendly societies, financial markets, collective investments, asset management, micro-lending and credit agreements. The Authority reports on consolidated industry data as well as supervisory developments or activities on a quarterly and annual basis.