It is my pleasure to report on the performance of CBZ Insurance Operations, which incorporates the activities of CBZ Life (Private) Limited and CBZ Insurance (Private) Limited. I am pleased to report that the Operations posted commendable results in spite of the challenges in the operating environment.
Stiff competition continued to characterise the industry, with several players in the market fighting for a constricted market. The liquidity challenges obtaining in the market continue to hamper new business prospects as most corporates and individuals struggle to remit insurance premiums. This significantly affected growth in new business and investment income. We continued to review our competitive strategy with a view to focusing on profitable segments of the market.
The Company reported a growth in after tax profit of 17.0% to close the year at US$514 597. The positive growth in profitability has been supported by growth in Gross Written Premium of 20.0% and an increase in risk retention from 47.0% in the year 2013 to 51.0%. The result was however achieved against the backdrop of an increase in claims ratio from 33% in the prior period to 47% in 2014.
The Statement of Financial Position closed the year at US$7.8 million, a 40.0% growth from the December 2013 position of US $5.6 million, underpinned by increase in underwritten business during the year.
The Company recorded an after tax profit of US$2.56 million for the year ended 31 December 2014 against a US$3.26 million profit which was recorded in year 2013. Total assets grew by 37.0% to US$11.44 million, with core capital sitting at US$8.52 million, well above the US$2 million required by the regulator.
We continue to expand our business where we see opportunities for sustainable growth, especially in the informal sectors of the economy. In this regard and in anticipation of future business growth Insurance Operations have made significant progress in expanding on the existing delivery channels. We have engaged more insurance agents to scout for business as well as redoubling our efforts in soliciting for broker business. The strategies we adopted in the prior year positioned us for an even stronger 2015, as we concentrate on our core priorities.
Insurance Operations continued to explore synergies with CBZ Bank Limited and a number of initiatives having been undertaken targeting the Bank’s account holders. The diversification of our product lines has helped cushion the impact of the harsh operating environment and so we continued to create value for our stakeholders.
We have invested significantly towards driving customer focused product development initiatives. Our efforts to improve risk selection, strengthen distribution, and grow sales have begun to pay off. The Operations have become stronger, more efficient and sustainable, with increased business underwriting capacity.
In this regard, the two entities managed to receive unqualified actuary valuation reports for the period under review. This augurs well with the marketing strategy as this is a good selling point of our operations.
Despite the growth in the industry’s total assets, negative economic pressures continued to hamper the growth of business in the sector. Product development characterised the competitive environment within the industry as life assurance companies battled for market share. The industry however remains well capitalised despite the upward revision of capital requirements by the regulator.
During the year, the Life Assurance Company completed the implementation of the new administration and accounting systems, the Exergy and Accpac respectively. This is in line with the Service Excellence Strategy that information technology is a key differentiator in our operations.
We continue to look at ways to simplify the organisation so as to enhance the speed of executing our service to our valued customers. Product development and quality of service will continue to be key drivers of our performance. Strengthening of the selective underwriting business philosophy will also guide our risk management principles in doing business.
The current mix of products being offered by the Operations is expected to sustain continued growth, with new products such as the Whole Life and Employee Benefits, that are soon to be launched, expected to improve future performance.
I would like to thank our valued customers for their continued loyalty.
I also wish to extend my gratitude to the CBZ Insurance and CBZ Life Boards, Management and staff for their performance and support to the Company.
My appreciation also goes to fellow Subsidiary companies of the Group and the Group’s Executives for their unwavering support.
25 February 2015