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The Structure Of Ghana’s Life Insurance Industry

The National Insurance Commission has released the unaudited financial results of the 20 life insurance companies currently licensed to operate in Ghana. TOMA IMIRHE & ELLIOT WILLIAMS examine the financial performance of the companies in an industry about to engage in major recapitalization

The clock will soon start running for Ghana’s life insurance companies who will be required to recapitalize to a minimum of GHc50 million, up by over 230 percent from the current minimum capital of GHc15 million. Already a debate has opened up as to whether the industry’s players will be able to meet the new minimum when it is eventually made official and a definite deadline is announced within which they will have to comply.

But going by their own unaudited, management accounts figures for 2018, as captured by the industry regulator, the National Insurance Commission, Ghana’s life insurance industry has the potential to justify the Impending new capital requirements. Each and every member of the industry made underwriting profits in 2018; unlike with their non-life (general) insurance cousins, no life insurance firm had to rely on investment income to turn around underwriting losses in 2018.

Altogether, the 20 companies in the industry made cumulative gross premiums of GHc1,320.299 million in 2018, utilizing cumulative total assets of GHc3,100.259 million. However, this exaggerates the profitability of the industry. Now subject to stringent regulation and faced with fierce competition among themselves, Ghana’s life insurers, once notorious for evading claims, have become willing claims payers.; in 2018 alone, the industry incurred collective gross claims of nearly GHc708.823 million, which amount to more than half of the gross premiums they received.  Importantly though, a significant proportion of the gross premiums collected and the resulting claims incurred are hived off to reinsurance companies who thus share in both the risks and the rewards of Ghana’s life insurers.

Ghana’s life insurance industry has undergone significant structural change in recent years. The largest life insurer, whether adjudged by gross premiums or total assets is now Enterprise Life, a member of the Enterprise Group, which reaped gross premiums of GHc355.474 million in 2018 and had total assets of GHc 714.466 million by the end of the year.

This marks a change of the guard at the top of the industry’s ladder; until a few years ago, the leader was SIC Life, which is now second with GHc304.522 million in gross premiums last year and GHc505.903 million in total assets by year’s end.

Third is Star Life with GHc209.297 million in gross premiums for 2018; but it actually ranks second by total assets, ahead of SIC Life, with GHc 530.272 million.

But the fiercest competition in the industry currently is between the companies that rank between 4th and 6th as adjudged by gross premiums. Prudential Life ranks 5th, by gross premiums for 2018 at GHc81.590 million, where it is sandwiched between 4th placed Glico (which made GHc109.018 million in gross premiums last year) and 6th placed Old Mutual (GHc68.055 million).

However, Prudential is arguably the fastest growing life insurer in Ghana today, its growth propelled by a professional expertise capacity which is outstanding in the industry when placed against its relative size. It is instructive that this has allowed it to generate gross premiums which are higher than two other life insurers that have substantially bigger total assets – Old Mutual and Met Life respectively.

Ghana’s life insurance industry is roughly equally divided between foreign and indigenously owned companies. There are nine foreign majority owned firms and 11 indigenous majority owned insurers. The foreign ones derive their ownership either from Europe or other African countries such as South Africa, Nigeria and Morrocco.

Interestingly, no life insurer in Ghana is listed on the Ghana Stock Exchange as a separate entity although Enterprise Life is part of the listed Enterprise Group. SIC Life’s sibling company SIC Insurance is listed on the GSE although the life insurance cousin is not. Some of the foreign parent companies of life insurers in Ghana are listed on their home country stockmarkets – such as Old Mutual whose parent is listed on both the London and Johannesburg Stock Exchanges and Met Life whose parent is listed in Johannesburg. – but not in Ghana.

However, with major recapitalization in the offing this situation is about to change; several insurers are already counting a listing on the GSE among their options for raising the new equity capital that is about to be required of them by the NIC.

This year, Ghana’s life insurers will have to keep their eyes on several things at the same time. Of course, market share and profitability will remain paramount. But they will also have to get ready to comply with the impending new minimum capital requirements. The impending new Insurance Law will have little that affects their operations although they will have to cope with strict enforcement of new financial reporting regulations.

All of which will make for a busy and challenging year for Ghana’s life insurance industry.



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