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The Insurance and Pensions Commission has revealed that only 12 out of 25 operating insurance companies had complied with the minimum capital requirement of $1,5 million by the end of last month.

According to IPEC’s short-term insurance report for the first quarter ended March 31, 2014 the 13 non-compliant insurers reported capital levels ranging from $520 000 to $1,49 million.

“The average capital maintenance ratio for the 13 insurers was 73,76 percent as at March 31, 2014. This implies that, on average, the capital position of the 13 insurers fell short of the minimum capital requirement by $390 000.

“The Commission encourages all insurers who fail to comply with the minimum capital requirements to consider merging, if other capital raising initiatives are not fruitful,” IPEC said.

The Commission has already suspended Altfin Insurance Company from writing new business due to undercapitalisation and failure to settle claims.

This followed an inspection conducted by IPEC during the quarter under review on the company which revealed that the institution’s capital position was worse than what they reported, after disqualifying some assets which they had reported.

This brought the number of registered companies not operating to two since ECGC remained suspended from initiating new business.

Meanwhile, total gross premium written by non-life insurers increased by 6,82 percent from $66,68 million for the quarter ended March 31, 2013 to $71,23 million during the quarter under review.

Out of the business written, $35,39 million was ceded to reinsurers, of which $15,58 million was ceded through reinsurance brokers.

Insurance brokers wrote business with total premium amounting to $24,64 million which constituted 34,60 percent of total gross premium written reported by non-life insurers.

Total profit after tax for non-life insurers increased from $3,31 million last year to $3,59 million during the quarter under review.

On the other hand, profit after tax for reinsurers decreased to $2,34 in this quarter from $3,03 million during the same quarter last year.

The major sources of business in the short term insurance industry remained motor and fire insurance.

Total assets for the non-life insurance industry increased from $327,56 million as at December 31, 2013 to $344,37 million during the period under review.

On average, there were no significant changes in the risk appetite for short term underwriters as evidenced by negligible changes in industry average retention ratios with direct underwriters reporting an average retention ratio of 50,30 percent for the quarter.

On the other hand reinsurers reported an average retention ratio of 72, 36 percent.

The number of registered and operational short-term insurers was 25 following the deregistration of four underwriters during the quarter under review while reinsurers were nine.

The four deregister insurers were Agricultural Insurance Company, Jupiter Insurance Company, SFG Insurance Company, Suremed Health Insurance Company.

Source : The Herald