Windhoek
The market value of assets recorded for the long-term insurance industry at the end of the first quarter of 2015 was N$42.6 billion, increasing slightly by 5.9 per cent from the N$40.2 billion reported as at the end of the fourth quarter of 2014.
On the other hand, liabilities increased by 3.4 per cent from N$35.6 billion as at December 31 2014 to N$ 36.8 billion at the end of the first quarter of 2015.
Therefore, excess assets over liabilities were N$5.8 billion as at March 31, 2015, increasing by 26.1 per cent from N$4.6 billion recorded at the end of the fourth quarter of 2014.
According to the first quarterly report by the Namibia Financial Institutions Supervisory Authority (Namfisa), the capital adequacy requirement (CAR), which is the excess assets/minimum capital requirement, showed that long-term insurers in the industry are sufficiently covered for the period under review.
“One insurer is covered between one to two times, three insurers are covered between two to five times, another three insurers between five to 10 times and nine are covered above 10 times, which demonstrates sufficient cover as per the Long-Term Insurance (LTI) Act of 1998,” states the latest report.
The report further states that gross premium income recorded for the long-term insurance industry for the first quarter of 2015 was N$1.8 billion, decreasing by 25.0 per cent from N$2.4 billion recorded in the fourth quarter of 2014.
Total gross policy-holder claims paid during quarter one of 2015 was N$1.2 billion from N$1.6 billion reported in the fourth quarter of 2014, translating into a 25 per cent decrease in value of claims made by policy holders.
Expenses decreased from N$473 million reported in the fourth quarter of 2014 to N$377 million during first quarter of 2015, reflecting a 20.3 per cent decrease.
According to Namfisa this overall decline in expenses is mainly attributed to decreases in management and commission expenses.
Meanwhile, the short-term insurance industry’s financial position was measured at a solvency ratio of 29 per cent as at the end of the first quarter of 2015 compared to 28 per cent at the end of the fourth quarter of 2014.
“The solvency ratio remains stable and total liabilities are covered 1.4 times by total assets as at March 31, 2015. The industry recorded gross earned premium income of N$0.95 billion in this quarter representing an increase of about 10 per cent from N$0.87 billion during the fourth quarter of 2014 while total claims, commission and expenses incurred during the current quarter was recorded at N$0.58 billion,” reads the report.
Also, total assets of the medical aid funds Industry (MAFI) increased by 7.1 percent from about N$1.15 billion as at December 31, 2014 to N$ 1.24 billion as at March 31, 2015. The gross contributions received increased from N$668.5 million to N$738.3 million for the quarter ended March 31, 2015. “Therefore, the total average industry reserve ratio (surplus assets/ annualised contributions) deteriorated from the 33.5 per cent reported as at December 31, 2014 to 32.1 per cent as at the end of the current quarter,” said Namfisa.
Total liabilities in MAFI increased by 11.7 per cent from N$264.2 million to N$295.0 million for the quarter under review.
NAMFISA explained that all classes of liabilities increased except for the savings plan liability which was negatively affected due to many claims from one open fund.
The total membership of registered medical aid funds decreased by 0.9 per cent over the quarter from 179 364 at the beginning of the quarter to 177 732 at the end of the quarter under review.
“The decline in membership is ascribed to retrenchments amongst various employer groups and a change in structure within one open fund for certain employer groups that had a historic pattern of high claims,” noted Namfisa.
The authority clarified that retirement funds last submitted annual returns for the 2014 calendar year and the quarterly return was introduced in the first quarter of 2015. “However, extracts from the quarterly return for statistical purposes, like the income statement and balance sheet, could not be consolidated from the system. Most of the quarterly statistics that could be generated related to Regulation 28 investment holdings and other figures.
“Therefore, we regarded the 2014 annual data as the most reliable information for this reporting period.
Contributions received for year ending December 2014 were up by 27.5 per cent while fund expenses also increased by 24.5 per cent compared to the prior year,” states the report.
The total membership (pensioners and active members) for retirement funds increased by 22.4 per cent to 364 045 at the end of 2014. Pension fund assets increased by about 13.6 per cent to N$119.6 billion at the end of year 2014.
Also mentioned in the report were the the assets of unit trust schemes which increased by 8.3 per cent to N$45.6 billion for the quarter ended March 31, 2015.
“The schemes invested N$23.6 billion of the assets in domestic markets, which is 51.8 per cent of total assets.
Investments in the Common Monetary Area decreased by 3.3 per cent while offshore investments increased by 9.8 per cent over the period under review,” states the report.
Also, during the quarter under review Namfisa received a total of 150 complaints from users of non-bank financial services (micro-lending and credit agreements institutions, long and short-term insurance institutions, pension funds, medical aid funds and referrals (other)).
“This indicates a decrease of 47 complaints compared to the previous quarter. The complaints department managed to resolve 144 complaints during the quarter under review,” said Namfisa.