THE mandatory cessions on all registered insurance and reinsurance coupled with improved underwriting practices have resulted in the Namib Reinsurance Corporation (NamibRe) reporting a strong financial performance.
According to the corporation’s 2020 annual report, this includes a 184% increase in gross written premiums from N$265 million in 2018/19 financial year to N$755 million in 2019/20.
The gross written premium (GWP) comprises N$709,7 million revenue from non-life business and N$45,3 million from life business.
The substantial increase in the GWP is attributed to the “implementation of the per policy cession as a result of a Supreme Court ruling in December 2019, which enforced section 39(1) of the NamibRe Act and accompanying government notices,” the report read.
NamibRe is reinsurance, also known as insurance for insurers or stop-loss insurance, which enables insurers to transfer portions of their underwritten risk and cover part of the claim when they occur.
The increase in GWP aided a 12% increase in NamibRe’s retention from 67% (2019) to 79%.
The increase in retention is a positive indicator because it means more insurance companies are reinsuring with NamibRe and keeping the money that is supposed to be remitted abroad in reinsurance fees.
“This is in pursuance of its mandate to curb capital outflow due to placement of insurance and reinsurance business outside the country,” the report read.
According to Namibia Financial Institutions Supervisory Authority (Namfisa’s) latest data, the country has 14 long-term insurance companies with total assets of N$58,8 billion – the industry’s gross written premiums were valued at N$2,1 billion at the end of the second quarter of 2020.
While the short-term insurance industry’s total assets stood at N$6,4 billion during the review period, gross written premiums amounted to N$15,3 billion by the end of 2020’s second quarter.
The NamibRe net profit exceeded the projected target of N$9,9 million to reach N$39 million during its 2019/20 financial year.
Shareholder funds increased from N$236,5 million (2019) to N$254 million in 2020, while their total assets increased from N$440 million (2019) to N$684,8 million in the current year.
The corporation is the only reinsurer in Namibia and provides reinsurance to local and international companies.
In terms of the Namibian National Reinsurance Corporation Act, insurance companies are obliged to present 20% of their underwritten insurance to the corporation.
The Act, and Government Gazette No. 6496 stipulate that short-term and long-term insurance companies should cede 12,5% of every policy to NamibRe as compulsory reinsurance.
These government directives are still subject to legal challenges in court by some companies, therefore only a few insurers are presently complying.
The corporation becomes involved from time to time in various claims and lawsuits incidental to the ordinary course of business.
The corporation is currently involved in litigation between itself, the government, and the insurance industry related to the NamibRe Act.
Legal expenses incurred by NambiRe by the end of March 2020 were estimated at N$3,5 million a decline from the N$6,2 million at end of March 2019.
At the same time, the corporation has a contingent liability in respect of legal costs of about N$9 million payable to the applicants in respect of its legal costs incurred.
Contingent liabilities represent items that as of 31 March 2020 have not been recognised in the statement of financial position because there was significant uncertainty at that date as to the necessity for the Corporation to make payments in respect of the legal case.
NambiRe also paid government legal fees of N$1,1 million by the end of March 2020.
Reinsurance assets receivable declined to just N$50,3 million in 2020 from N$90,9 million in 2019.
The corporation declared and paid dividends to the shareholder of N$10 million for the year an increase from N$6,2 million paid in 2019.
NamibRe is not obligated to pay income tax unless the general reserve fund is equal to or exceeds twice the authorized share capital.
The financial statements also show that the reinsure firms have invested/lent N$22,2 million in government bonds.
Moreover, NambiRe has N$147,1 million worth of investment in various funds, the biggest allocation being Bank Windhoek Select Fund with N$43,3 million.
Interest from investments for the year is N$9,7 million, with the previous year recording N$9,0 million.
In an age of information overload, Sunrise is The Namibian’s morning briefing, delivered at 6h00 from Monday to Friday. It offers a curated rundown of the most important stories from the past 24 hours – occasionally with a light, witty touch. It’s an essential way to stay informed. Subscribe and join our newsletter community.
The Namibian uses AI tools to assist with improved quality, accuracy and efficiency, while maintaining editorial oversight and journalistic integrity.
Stay informed with The Namibian – your source for credible journalism. Get in-depth reporting and opinions for
only N$85 a month. Invest in journalism, invest in democracy –
Subscribe Now!
