[2008-08-20]  BIHL Weathers Global Storm
Botswana Insurance Holdings Limited (BIHL) has weathered the global economic downturn to release solid results.

However, compared to last year, the company's overall results were less impressive, as a result of a knock in the global equity markets. But still, BIHL managed to register a double-digit growth despite the turbulence. BIHL is the holding firm company for Botswana Insurance Fund Management (Bifm) and Botswana Life insurance firm. The company chairman, Maclean Letshwiti said at the launch of group results at Gaborone Sun yesterday that BIHL is in an enviable position at a time when financial companies globally are seeking help from governments.


The group's net premium income increased by 24 percent to P472.9 million for the six months ended June 30, 2008. This was largely due to the value of new life business, which went up by 30 percent to stand at P44.0 million for the period under review.

The increase is due to improved new business volumes and good management of operating expenses. Despite adverse inflationary pressures, operating expenses increased by 6 percent to P68 million.

BIHL saw its core earnings increase by 13 percent to P172.3 million for the period. This was however dampened by a 45 percent decrease to P175.4 million of total surplus after tax.

"The decrease of total surplus was as a result of unrealised investment losses on shareholder assets attributable to the downturns in both the global and local capital markets," the group financial statement says.

Botswana Life's net insurance income increased by 24 percent to P472.9 million for the period under review. However, operating surplus decreased by 15 percent to P72.9 million, again due to the negative effects of the downturn in global equity markets.

Botswana Life chief executive officer, Regina Sekaleseke-Vaka said they are pleased with positive results despite a gloomy operational outlook that has increased a squeeze on consumers' disposable income. She said this is due to excellent new business volumes, introduction of three new products and a decrease in a number of lapse rates.

Botswana Life paid P197.3 million insurance claims and benefits to policyholders. This is 23 percent higher than the previous year.

Sekaleseke-Vaka said they will continue to diversify from life business, increase customer retention, open new branches, and venture into Bancassuarance with local banks.

She warned that operating surplus will be hurt if inflationary pressures persist and lapse rates increase as policyholders cash in and new entrants join the market. "All is not doom and gloom because we remain positive as a company and indeed as a group."

The chief executive officer for Bifm, Victor Senye said their results are in line with the budget and diversification worked for them with a good growth from subsidiaries.

Bifm like its peers in the asset management industry like Investec, Flemming Asset Management, retained a stake in the lucrative multi-billion Botswana Public Officers Pension Fund (BPOPF). Bifm has heavily invested in global stocks. The company says it will continue to pursue diversification in a bid to hedge earnings during hard times.

"We (Bifm) continue to favour equities over bonds. Our asset allocation is based on the long term. But there will be challenges in the short term. We need to ride the storm in order to go through," he said.

Senye noted that the past six months have been difficult in finding a chief investment officer at a time when the market is doing well and this presents a challenge. "We were able to survive during the period since we had support from Sanlam in South Africa," he said. Sanlam is a South African-based financial institution with a 54 percent stake in BIHL.


Source: Allafrica