- Operating profit up 11% mainly due to improved assets under management position
- Net premium income up due to growth across income lines
- Operating expenses up due to cost of equipment for working remotely, health and safety measures
Blue-chip insurance company Botswana Insurance Holdings Limited (BIHL) Group’s operating profit for the year ended 31 December 2020 improved by 4 percent to P393 million compared to the P376 million of the same period last year.
According to BIHL Board Chairperson Batsho Dambe-Groth and Chief Executive Officer Catherine Lesetedi, operating profit for the life business remained steady, showing resilience despite the challenging economic environment brought about by the COVID-19 pandemic.
“The asset management business operating profit for the year is 11 percent higher than the prior year, owing to an improved assets under management position from the previous year, leading to higher fee income earned,” they noted in the BIHL financial results released recently.
“Share of profits of associates and joint ventures increased by 81 percent; in December 2019 there was a P106 million impairment due to a drop in fair value of Letshego Holdings Limited which did not recur this year. The other associates, Funeral Services Group, Botswana Insurance Company Limited and Nico Malawi Holdings reported significantly better results compared to last year.”
The group’s net premium income also grew by 11 percent, from P2.60 billion in 2019 to P2.88 billion in 2020, with all income lines posting growth of at least 6 percent and above. Total new business written declined by 4 percent on both individual life recurring and some of the group lines as a result of the effects of COVID-19 pandemic. Recurring premium income grew by 8 percent from P1.51 billion in December 2019 to P1.64 billion in 2020 underpinned by group lines.
“The value of new business, which represents the present value of future profits from new business premiums written during the year, declined by 18% against prior year mainly due to low value of new business margins on the annuity line as well as low new business volumes on the individual life products,” Dambe-Groth and Lesetedi noted.
They said operating expenses increased as a result of costs incurred to implement COVID-19 health and safety measures in the group’s offices and branches, as well as providing employees with the necessary equipment to enable working remotely. “This is after factoring in cost savings from travel and discretionary expenses,” they noted.
“As a result of the COVID-19 impact, the business accelerated its digitization projects. These will enable us to continue to write new business, enhance the customer experience by giving our customers online capability to access our platforms as well as several options to pay their premiums.