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Home » News » Business » BIHL reports impressive results

BIHL reports impressive results

Publishing Date : 12 September, 2017

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Botswana Insurance Holdings Limited (BHIL) has reported that its net premium income decreased by 4% year on year to P1.104 billion compared to P1.145 billion achieved in prior year due to suppressed annuity business income.


The Group says recurring premium income grew by an impressive 12% from P530 million in June 2016 to P592 million during the first 6 months of 2017. This line represents a sustainable source of profits in the long term. “The value of new business written has decreased by 22% from proi r year owing to low new business volumes and reduced margins. Operating profit decreased from P192 million in June 2016 to P147 million in June 2017.”


According to the company’s financial results statement, the major explanation for the decrease was the low volumes for single premium business which was acquired at lower margins. Given the challenges on the profitability of the business, the company says it has embarked on a streamlining exercise to improve efficiency. During the period the company launched Sharia compliant investment products which are expected to contribute to new business growth going forward.


“The business also introduced a new life cover product, Poelo Whole of Life, aimed at benefiting members with a lifetime cover, inclusive of a 120% premium payback after 15 years. The launch of these products shows our commitment to introducing innovative products that meet market needs, and the products are expected to have a positive impact on revenue and value of new business targets,” reads the statement.

Meanwhile BIHL says the outlook for the domestic economy remains fragile due to the unstable world economy outlook and the constrained household income growth, which represses discretionary spending. Despite these challenges Management is focused on delivering sustainable growth and value to its stakeholders through various innovations.

BIFM’s H1 exceptional

As for the Asset management business, BIFM group’s first half of the year was exceptional with the business performing above prior year in terms of operating profit by 41%. BIHL says the good performance is on the back of a strong assets under management position increased by new mandates won in the latter part of 2016. Favourable exchange rates and interest income positively affected the Zambia business. The efficient management of costs resulted in the company posting an operating profit of P30.8 million. Total assets under management (including Zambia’s P4 billion) currently stand at P25 billion due to improved market performance.

Short term insurance business


The first half of 2017 has seen a continuation of challenging market conditions, and the business has experienced a significant decline in new business as well as a rise in policy cancellations, many of which are due to clients experiencing financial constraints which has made it difficult for them to continue with their Legal Guard policies. This has impacted revenue negatively with premium income being 1.4% lower than for the same period al st year.


“During the first half of the year, Legal Guard embarked on and concluded a restructuring exercise. This had become imperative to align the business’ cost base to levels more appropriate to a business of the size and nature of Legal Guard and thereby improve the company’s ability to achieve sustainable profitability. Legal Guard achieved an operating loss of P0.9 million for the first six months of 2017. The main cause of this outturn was a once off P2.1 million cost incurred as part of the restructuring exercise completed on June 2017,” says BIHL.


Despite these negatives, BIHL says the first half of 2017 saw a significant achievement for the business with the go-live of its new core operating system in April 2017. The system is expected to improve revenue stability going forward as well as provide an enhanced platform for claims administration. According to the Group, the system will also facilitate internal process efficiency improvements and the division’s quality of decision making information which will, in turn, reduce the business’ cost ratios, whilst also, releasing resources to focus on customer experience improvements. Management has embarked on an exercise focused on improving the productivity of the distribution force and this is expected to impact new business and file size growth going forward.

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