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Botswana Life remains BIHL’s cash cow

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Diversified financial services giant Botswana Insurance Holdings Limited (BIHL) has made P342.3 million in profit, however 74.5 percent of the money was made at Botswana Life Insurance Limited (BLIL), its largest money spinning subsidiary, financial results for the year ending 31st December 2018 show.

BIHL owns 100 percent of Botswana Life. It also owns Botswana Insurance Fund Management (BIFM), the largest asset local management firm by assets under management. The company owns Legal Guard, half of Botswana Insurance Company, a quarter of Letshego Holdings Limited and around 35 percent in the country’s largest undertakers, Funeral Services Group (FSG). BIHL also owns Nico Holdings in Malawi.

BIHL, an institution under the curatorship of Group Chief Executive Officer Catherine Lesetedi-Letegele made a premium revenue of P2.3 billion, which was from Botswana Life, the group’s cash cow.

Recurring premium income grew by 8 percent from P1.25 billion to P1.35 billion representing 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 year, decreased by 1 percent from the prior year owing to increased pressure on margins.

Operating Profit improved by 11 percent over the prior year due to improved profitability resulting from reduced new business strain on the individual life book and improved claims on the credit life book. During the year, the business launched yet another innovative product, the Botswana Life International Investment Plan (BLIIP) for its high net worth clientele. The product which is a first of its kind in Botswana is a USD denominated offshore investment plan. The game changer product has an added feature where the client can self-manage their funds by having credentials to access their investment portfolio online.

Launched on the 1st November 2018, this product is an expansion to the Affluent Client Value Proposition (CVP) that affords bespoke channels for Botswana Life clients to manage and grow their wealth.

BIHL’s asset management firm, BIFM, is the second largest money maker. The subsidiary alone, pumped P67 million into the BIHL profits.

BIFM’s operating profit showed a year on year decline of 3 percent, an improvement from the half year performance which showed a 7 percent decrease year on year, demonstrating the group’s resilience in a tough operating environment. While income performance in both BIFM and Zambia showed a year on year increase, the businesses had to incur some business-critical expenses, resulting in higher costs in 2018, which coupled with an unfavourable Kwacha performance weighed down the operating profit number, according to Lesetedi-Letegele.

Fortunately though, total assets under management grew by 3 percent year on year to P27.5 billion. Botswana made P23.2 billion and Zambia P4.3 billion. BIFM owns a large stake in a company called African Life in Zambia.

BIHL operates Legal Guard, which achieved an operating profit of P4.1million for the year, up from P1.4million for 2017. According to the BIHL CEO, this has been achieved as the benefits of initiatives which began in prior years continue to be realised. She said the business has continued to improve its claims administration processes resulting in a significant decline in claims costs. The business has also achieved a 9 percent year on year decline in operating expenses following the restructuring exercise undertaken in 2017 and a continuing focus on managing operating costs

Amongst the BIHL associates, Letshego is the biggest by profitability and market value. It also contributes the most money to the BIHL profit from associates.

“We are proud to be trailblazers of this industry and introduce game changing products into the market. In an industry where you must constantly reinvent your products and services to meet and align with the ever changing needs and wants of the market, it brings us great joy to be right on target. The development of this product demonstrates our steadfast commitment to innovation and addressing customer needs in what continues to be a challenging business environment,” Said the BIHL Group CEO.

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