The insurance industry’s total capital base increased to ¢2.91 billion at the end of December 2020, from GH¢2.53 billion recorded in December 2019.
This is a growth of 15% over the previous year.
According to the Bank of Ghana Financial Stability Review 2020, Capital Adequacy Ratio (CAR), a metric that measures the quality of available assets to meet obligations, stood at 415% and 328% for the life and non-life insurance subsectors respectively.
Importantly, the CAR for the life and non-life industry, in the review year, exceeded the minimum requirement of 150% for the industry.
The report further said improvements in corporate governance practices and the efforts made by insurance entities to meet the new minimum capital requirement contributed to this strong result.
The outlook for the solvency position of insurance institutions within the industry remains positive especially with the on-going recapitalisation exercise
Return on equity increase significantly for nonlife insurers
Also, return on equity increased significantly for nonlife insurers and remained stable for life insurers.
In the life sub-sector, poor underwriting results and declining investment income led to a reduction in return on equity.
In contrast, return on equity in the non-life sub-sector increased on the back of investment income, which more than compensated for poor underwriting results within the non-life subsector. Underwriting losses and declining investment yields remain significant risks to profitability within the insurance industry.
The report said to address underwriting losses, insurers need to adjust their business models to prevent underpricing of risks while strengthening their cost control measures. In the near-to-medium term, the widespread use of the MID and the on-going recapitalisation exercise, with cost control measures, is expected to improve underwriting results.
Total investment assets grew to ¢5.7bn
Total investment assets also grew to ¢5.7 billion at the end of December 2020, from ¢4.9 billion at the end of December 2019.
In the non-life sub-sector, total investment assets amounted to ¢1.9 billion, as compared to ¢3.9 billion in the life sub-sector.
The total investment assets in both the non-life and life sub-sectors were concentrated in fixed income securities, with a gradual shift of investments to the real estate sector, moderating in 2020.
In the life subsector, investments were primarily in Government of Ghana and Bank of Ghana securities (42.0%), investment properties (24.7%) and fixed deposits (19.5%).
Similarly, in the nonlife sub-sector, investments were primarily in fixed deposits (28.5%), GoG and BoG securities (24.7%) and investment properties (24.7%).
Insurance companies have up till the end of this year to recapitalise to ¢50 million or face revocation of license by the regulator.
Latest Stories
-
35th CIMG Awards: Full list of winners
1 hour -
The Multimedia Group wins big at CIMG Awards 2023
2 hours -
Bernard Mornah wins PNC flagbearship race
3 hours -
Video: Confusion at PNC National Executives election
3 hours -
Rapper E.L. joins King Promise as Guinness Accravaganza headliner for September 21 showdown
4 hours -
PNC Congress: Bernard Mornah leads in Greater Accra Region
5 hours -
Reject violence, divisive rhetoric, embrace peace ahead of elections – Bawumia appeals to Ghanaians
5 hours -
SEFF’s debut single ‘Father’ sets stage for bold new talent
6 hours -
Super typhoon Yagi kills four in Vietnam
6 hours -
Hollard Insurance-UENR Mentoring Day: Students urged to let hard work, integrity shine to advance career
6 hours -
2024/25 GPL: Vision FC opens campaign with draw against Berekum Chelsea
6 hours -
If Baba Yara pitch was good, Mumin clears the ball – Laryea Kingston
7 hours -
GPL 2024/25: Samartex begin title defence with draw against Dreams FC
8 hours -
Financing road construction and maintenance through a special fuel levy: A sustainable solution for Ghana’s road infrastructure
8 hours -
Ghana Celebrity Impact Awards 2024 launched to honor positive social influence
8 hours