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Net closes in on under-capitalised assurers

by Staff reporter
08 Jan 2019 at 20:58hrs | Views
The Insurance and Pensions Commission (Ipec), is closely monitoring three under-capitalised life assurance firms - Evolution Life, Heritage and Fidelity Life - after the assurers closed the third quarter of 2018 below the regulatory $5 million capitalisation threshold.

In its third quarter 2018 report, Ipec said the players were required to furnish the watchdog with sound recapitalisation plans and seek the approval of the commission as required by law.

Evolution Life trailed below the regulatory threshold with a $3,2 million capitalisation as Fidelity Life's capital levels were recorded at $3,9 million while struggling Heritage Life had a paltry $713 000 capitalisation.

"A total of three out of 11 operating life assurance companies reported capital levels, which were below the minimum required capital of $5 million… The commission will be closely monitoring their progress," Ipec said, adding the commission is making appropriate regulatory interventions on the under-capitalised life assurance players in a bid to foster compliance.

Statutory Instrument 95 of 2017 requires life assurance players to meet a minimum capital requirement of $5 million after adjusting assets and liabilities as per the dictates of the same statutory instrument.

According to Ipec, compliance with the minimum capital requirement is critical for life assurance players as it enhances the safety of policyholders.

At the end of the third quarter of 2018, the highest capitalised assurer was Old Mutual Life Assurance with a $320,8 million capital base, followed by First Mutual at
$74,6 million as CBZ Life came in at $19,8 million.

Zimnat Life closed the quarter with capital levels of $27,5 million.

Econet Life stood at $15,6 million, with Nyaradzo at $17,2 million as ZB Life came in at $16,5 million, while Getsure Life narrowly met the threshold at $5,3 million.

The report attributes the decrease in Fidelity life assurance's capital position to a decrease in assets of $4,46 million as compared to a decrease in liabilities of $1,79 million, mainly driven by a decrease in other investments of 39 percent.

Ipec also noted that a significant growth in the capitalisation of Old Mutual life Assurance was mainly driven by an increase in assets by $152,37 million which was more than the increase in liabilities of $119,82 million. Assets growth was driven by increase in value of equities.

Meanwhile, Gross Premium Written (GPW) for life assurers for the nine months ended  September 30, 2018 amounted to $300,69 million, reflecting a 13,06 percent growth from $265,95 million that was reported for the comparative period in 2017.

Growth in GPW was mainly driven by strong growth in funeral assurance business and fund business as clients' tastes shift. On the other hand, GPW reported by composite reinsurers amounted to $6,91 million for the period under review, a growth of 17,46 percent from $5,88 million reported for the nine months under review.

Source - dailynews

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