BIHL on upward trajectory

  • BPOPF mandates boost BIFM
  • BIHL signs new business under life insurance


Profits seen by the behemoth financial services company, Botswana Insurance Holdings Limited (BIHL) are on the rise, driven by new business under life insurance and sustained mandates from Botswana Public Officers Pension Fund (BPOPF).
For the half year ending 30 June 2018, total group revenue shot up to P1.5 billion, from the previously reported P1.1 billion in 2017.
Consequently, profit for the period also grew significantly to P272 million. During the 2017 half year period, the profits were at P252 million.
As it is the norm, BIHL, a company owned 58 percent by South Africa’s financial services firm, Sanlam Emerging Markets, makes most of its money from life insurer, Botswana Life Insurance Limited (BLIL). Botswana Life, the largest life insurer by market share, is wholly owned by BIHL.
Under Botswana Life, Life insurance business Net Premium Income for the first half of 2018 grew by 5 percent from P1.1 billion in 2017 to P1.15 billion, with all income lines showing growth from prior year.
The company announced that total new business written grew 7 percent underpinned by strong single premium income performance. Recurring premium income grew by an impressive 9 percent from P605 million in June 2017 to P659 million in June 2018.
BIHL Chairperson Batsho Dambe-Groth said this line represents a sustainable source of profits in the long term. The value of new business, which represents the present value of future profits from new business premiums written during the period, increased by 14 percent from prior year on the back of impressive new business volumes from the group lines and term assurance policies.
As a result operating profit grew 15 percent on prior year mainly because of good new business volumes from the group line, low new business strain and cost savings from the streamlining exercise carried out second half of last year. Operating profit increased from P142 million in June 2017 to P164 million in June 2018.
BIHL also operates an asset management business through its wholly owned Botswana Insurance Fund Management (BIFM). The asset management business group’s overall Operating Profit in the first half year showed a decline of 8 percent year on year.
“This is as a direct result of Zambia Operations not performing as expected due to unrealized activities that were anticipated to take place in the year 2018,” Dambe-Groth said. BIFM is headed by Neo Bogatsu.
Further, BIFM Unit Trust on the other hand is showing a stagnant performance compared to prior year due to the adverse performance on the overall Assets Under Management ( AUM), the company said.
“Despite the current difficult trading conditions, where we have witnessed several new entrants into the market and pension funds adopting new strategies of splitting mandates, BIFM has continued to show resilience and continued to gain market confidence and maintain its position as a leading Asset Management Company,” Dambe-Groth said.
Total Assets Under Management including Zambia’s P4.7 billion stands at P26 billion. BIFM is one of the largest beneficiaries of billions of Pula awarded as Botswana Public Officers Pension Fund (BPOPF) mandates.
BPOPF recently awarded new mandates. African Alliance, Bifm, Investec and Allan Gray were the only winners. Under Botswana equities portfolio African Alliance walked away with P4.25 billion followed by Bifm at P4.13 billion with Allan Gray concluding the transaction at P4.12 billion.
Bifm is leading the pack under the Botswana fixed income portfolio taking P2.3 billion just above African Alliance’s P2.0 billion with Investec bringing up the rear with the remaining P1.5 billion. On the Botswana cash portfolio, Bifm once again came out tops taking home P650 million followed by Investec with P570 million and African Alliance with P407 million.
Cumulatively, BIFM manages almost P10 billion from BPOPF, Africa’s third largest pension fund. BPOPF is also a significant shareholder in BIHL.