The African Reinsurance Corporation (Africa Re) half year 2021 result has shown increases across the financial statement establishing a positive performance. The group managing director, Dr. Corneille Karekezi seals the performance, “it is pleasing to note that the positive performance achieved in the first quarter of the year is being sustained through the first semester of 2021 and we remain cautiously optimistic for the rest of the year, barring any unforeseen major losses.”
The reinsurer’s statement disclosed that the gross premium income of US$421million was recorded when compared to US$393million achieved in the same period of 2020. This performance it stated, was a translation of additional facultative acceptances mostly in the oil and gas portfolios.
The company explained that there was a positive impact of the 7.2% growth of the gross written premium, a reflection of the ongoing recovery of businesses and appreciation of the operating currencies against the US Dollar, especially the Rand and CFA. Also, the gains in currency fluctuation was slightly offset by the significant devaluation of the Sudanese Pound.
Africa Re further said the net underwriting profit grew by 69.1% moving up from US$5.4million to US$9.2million.
It noted that the year-to-date claims experience as measured by the net incurred loss ratio improved to 61.9% compared to 64.6% in the same period of 2020.Besides, the restructuring of previously poor performing portfolios it stated, yielded positive results on the claims experience despite a slight increase of the overall cost of the Covid-19 related insurance claims which it commented was expected.
Similarly, business acquisition costs increased by 22 % from US$71million in June 2020 to US$86million in the period under review translating to an expense ratio of 28.5% compared to 24.4% in June 2020.
This was attributed to the increase in the top line combined with higher than usual profit commissions paid to ceding insurance companies whose solvency relief contracts performed exceptionally better. Consequently, the combined ratio at the end of June 2021 stood at 96.9%, an improvement of 98.1%.
Investment income for the reported period was US$31.3million, a significant improvement of 68.3% over US$18.5million recorded in the first semester of 2020.The positive performance was driven by capital gains and improved performance of most equities leading to higher dividend paid.
As a result of above underwriting and investment performance, the net profit for the 1st semester of 2021 was US$23.7million, exceeding by 27% the US$18.7million achieved in the same period of 2020.
