THE gross premium for short-term insurers marginally decreased by 0,3% to $66,68 million in the first quarter of the year weighed down by a decline in hail insurance.
Report by Own Correspondent.
According to a report released by the Insurance and Pensions Commission (Ipec), hail insurance declined to $370 000 from $4,19 million recorded in the same period the previous year chiefly attributed to the closure of SFG Insurance.
During the period Ipec closed SFG Insurance — a subsidiary of Zimre Holdings Limited — following investigations by the regulator which exposed a huge negative solvency ratio of the insurance company.
Its capital base was reported to have fallen far short of the minimum threshold required Ipec said in that period, short-term insurers recorded their first dip since the inception of the multi-currency regime in 2009.
However, gross premium written by reinsurers increased to $29,74 million up from $27,59 million registered last year. Of the business generated by the insurers and reinsurers, $31,7 million was obtained through local insurance and reinsurance brokers.
Ipec said the profitability of both non-life insurers and reinsurers improved to $3,31 million and $3,03 million respectively mainly attributable to an increase in unrealised gains emanating from the market of the investment portfolios as well as reduction in commission incurred.
Insurance brokers reported profits amounting to $0,62 million.
Although the direct short term insurers’ sector reported a positive overall profit position, five insurers namely Tristar Insurance Company, Regal Insurance Company, Altfin Insurance Company, Sanctuary Insurance Company and Eagle Insurance Company recorded losses during the quarter under review.
Underwriting profits increased to $2,89 million from $1,82 million achieved last year.
Notwithstanding the increase in underwriting profits, the average combined ratio for the non-life insurers increased to 88,20% from 82,63% reflecting deterioration in the profitability of the insurers’ core business of underwriting.
Ipec said the deterioration in underwriting profitability is further indicated by the decline in underwriting margin to 11,80% from 17,37% in the comparable year ago period.
Cell Insurance Company, Nicoz Diamond Insurance Company and RM Insurance Company were the top three insurers in terms of both gross premium written and net premium written with a combined market share of 46,42% and 45,99% respectively.
There were 28 registered short,term direct insurers as of March 31 this year. Of these, 23 non-life insurers were operational.
In terms of assets, Cell Insurance Company, Nicoz Diamond Insurance Company and Alliance Insurance Company were the market leaders with market shares of 13,75%, 11,93% and 11,50% respectively as at March 31.
Total assets for non-life insurers, reinsurers and insurance brokers increased to $326,27 million from $293,54 million.
However, the commission said it was concerned with high ratios of non-profitable assets to total assets which were 64,09% and 39,61% for insurers and reinsurers respectively as at 31 March 2013.