Ghana Reinsurance Company Limited, the country’s largest reinsurer has approved a resolution that will enable it meet the new minimum capital requirement for reinsurance companies, of GHc125 million, announced by the National Insurance Commission last week. Ghana Re’s shareholder – the Government of Ghana – approved a Board resolution at its annual general meeting, held in Accra yesterday, to transfer GHc25 million from its income surplus account to its stated capital, thus meeting the requirement. The quick compliance was made possible by its already strong capital base of GHc100 million – as against the erstwhile minimum of GHc40 million – coupled with large retained earnings and strong profitability for the 2018 financial year.
The company made gross profit of GHc53.03 million in 2018, up 7.30 percent on the GHc49.43 million made in the previous year. Net profit increased to GHc38.63 million, up from GHc34.03 million in 2017. This brought the income surplus account up to GHc64.7 million, making the requisite transfer to stated capital easy. Indeed, the company also declared a dividend of GHc9 million for its shareholder, the Government of Ghana.
Ghana Re’s increased profits came on the back of GHc205.66 million, up from GHc193.01 million recorded in 2017. General Business premium income increased from GHc181.70 million recorded in 2017 to GHc187.16 million last year. The Fire line of business continued to be leader in general business, contributing 62.3 percent of premiums followed by “other accidents” which contributed 18 percent and motor, 10 percent.
Premium income from the life business also increased by 63.6 percent from GHc11.31 million in 2017 to GHc18.50 million for 2018.
Importantly Ghana Re continued to achieve efficiency gains. While the commissions ratio increased to 34.9 percent for 2018, up from 29.6 percent in 2017, the claims ration fell to 42.5 percent down from 46.6 percent in the previous year. Similarly, management expenses ratio also was reduced from 26.3 percent in 2017 to 24.0 percent in 2018.
However lower interest rates last year caused a drop in investment income to GHc28.16 million last year from GHc35.01 million in 2017.
Ghana Re’s chairman, George Otoo assured that the Board will continue its strategy of expansion of the company’s international operations in selected markets. The company already has a subsidiary in Kenya covering its East African markets and a branch in Cameroun to grow its business in francophone Africa.
He concluded that in accordance with Ghana Re’s growth and expansion objective, the company will continue to strengthen its beneficial strategic alliances and form new partnerships to take advantage of reinsurance opportunities in both local and international markets.
Indeed, the company’s managing director, George Mensah, told Goldstreet Business that the company needs to expand its business volumes to justify its enlarged capital base; returns on equity for 2018 were 16.9 percent down marginally from 17.9 percent in 2017. Recapitalization of Ghana’s insurance industry will give primary insurers more capacity to retain risks rather than pass them on to reinsurers, although Mensah says the company expects to get bigger business volumes from both lo0cal and international markets to compensate.