Africa Re shows strong performance H1, records 30% growth in profit
The African Reinsurance Corporation (Africa Re) has recorded a gross premium income of $393 million at the end of the second quarter of 2020, compared to $431.87 million reported in the same period of 2019, being 8.99 percent below prior year.
This is as net profit of the first six months of 2020 was $18.72 million, outperforming the comparative period in 2019 (net profit of $14.39 million), an increment of 30.03 percent.
While the impact from the Covid-19 pandemic was almost nil in underlying performance, the depreciation of some original operating currencies was the main cause of the decline.
The year-to-date claims experience as measured by the net incurred loss ratio remains generally moderate at 64.66 percent compared to 68.03 percent in the same period of 2019.
The improvement over prior year was largely due to the cumulative impact of the actions taken to improve the quality of the underwriting portfolio, the low economic activity during the lock-downs and favorable claim reserve development.
Regarding Covid-19 related insurance claims, Africa has generally experienced very low mortality rates when compared to other continents. In addition, there are very few insurance policies in Africa Re’s portfolio, which covered the business interruption for modifiable and infectious diseases. As such, our claims experience has not been affected significantly either by mortality or property/casualty losses arising from Covid-19 pandemic.
As a result, the combined ratio at the end of June 2020 stood at 98.12 percent, outperforming prior year.
The net underwriting performance resulted into a profit of $5.47 million compared to a loss of $14.32 million in the same period in 2019.
Investment income for the six months to 30 June 2020 was at $18.59 million, a significant improvement over the loss recorded in the first 3 months of 2020 (loss of $6.51 million). The positive performance was driven by a recovery of financial markets especially the global equity markets. Although, the year-to- date performance of $18.59 million is below the comparative period in 201 9 (investment income of US$31.54 million), it is much better than the massively negative scenarios anticipated at the end of the first 3 months of 2020 during the early days of the Covid-19 outbreak.
While commenting on the unaudited financial performance at the end of the first half-year of 2020, Corneille Karekezi, the group MD/CEO of the Corporation, remains optimistic for the outlook of 2020.
Karekezi stated that, “Although, there is still uncertainty surrounding the full impact of the Covid-19 pandemic on businesses and economies, the Corporation’s financial performance for the first six months is generally positive and we remain cautiously optimistic for the rest of the year, barring any unforeseen major losses.“