Mixed fortunes for insurance sector

SELF-ADMINISTERED pension funds recorded a total of $136 million in contributions in the first quarter of the year, a report released by the Insurance and Pension Commission (Ipec) has shown.

Report by Own Correspondent

The report is centred on 13 standalone pension funds, three fund administrators and two life assurers.

Comparative figures for the first quarter of 2012 were, however, not available because the regulator commenced reporting for this sector mid last year.

According to Ipec, insurer administered funds realised total contributions of $22 million although 58% were in arrears while $4 million were paid in benefits.
The expense-to-contribution ratio was 15%.

The expense-to-contribution ratio is the percentage of premiums used to pay all the costs of acquiring, writing, and servicing insurance and reinsurance.

Ipec said fund administrators reported total contributions amounting to $41 million although $23 million was in arrears.

Total benefits and expenditure were $6 million apiece or 33% of received contributions reflecting a 32% expense ratio.

Funds reported an expense ratio of 15% against the recommended ceiling of up to 10%.

The regulator said in this regard, it will be doing site visits to probe both the rationale and the general breakdown of such high expenditure levels, which Ipec said was corroding member values.

Employer contributions amounted to $120 million representing 88% of total contributions, while members contributed $16 million.

However, $109 million representing 80% of total contributions was made up of arrears which have been accumulating on respective funds balance sheets over the preceding years.

Ipec said the rehabilitative measures are continuing in consultation with various key stakeholders.

In terms of assets and investment, standalone funds invested $528 million or 53% in properties, 15% or $147 million in capital market securities, 5% or $50 million in money market securities equities, 27% or $268 million in other securities and 1% in prescribed assets.

Ipec, however, said over the reporting period, there was no paper which was accorded prescribed asset status although there were two applications which are still under internal vetting.

The regulator in the report threatened to penalise offenders.

“Funds must stand guided by Circular 1 of 2013, which gave upper limits on investment guidelines per each asset class,” the report reads. “Failure to comply with the set deadline will force the commission to invoke the law and penalise offenders.”

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