NIC releases insurance Industry wide performance figures for 2024

By Elliot WILLIAMS

The Annual Report of the National Insurance Commission for 2024, which was released a fortnight ago has provided key insights into the performance of Ghana’s industry last year and some of the Implications for the industry going forward.

Despite the sharp economic headwinds that afflicted Ghana in 2024, the insurance industry demonstrated what the NIC terms “impressive performance” showing growth in both insurance revenue and the underlying asset values. However, while revenue growth was strong in nominal terms, in real, inflation-adjusted terms, growth was, at best, marginal as revenue and asset value growth rates struggled to keep pace with inflation, which averaged over 23% during the year.

While the life insurance sector recorded substantial growth in assets of 22% last year, this was nearly all eroded by inflation leaving the sector with real asset value growth of just 1%. Life insurance sector investments continued to dominate balance sheets growing by 23.4% from GHc7.06 billion to GHc8.72 billion. Government securities accounted for the largest chunk of life insurers investments with 42% of the sector’s collective portfolio, followed by property investments with 21% and bank fixed deposits with 20%. Investments in listed and unlisted equities accounted for 13.4% of their cumulative total investment portfolio.

The non-life sector fared even worse, its asset growth of 13% in nominal terms turned into a contraction in real, inflation – adjusted terms. Like with life insurers, non-life insurers kept the largest segment of their assets in the form of investments.

In 2024, non-life insurers maintained a diversified investment portfolio prioritizing liquidity and the security of the assets due to the short-term nature of the insurance contracts they engage in with their clients. Like with their life insurance counterparts, government securities made up the largest part of their investments, at 32% of the total. However, the second largest investment asset class was equities – both listed and unlisted – at 22.8%, followed by deposits with banks at 22.3%. Property investments only accounted for 16.7% of their investments, because of the relative illiquidity of such investments.

However, the reinsurance sector recorded much stronger performance with regards to asset growth, with a robust 44% nominal increase which was double the pace of headline inflation, and generated 16% growth in real terms. The NIC noted that “this led to a considerable increase in the real purchasing power of its assets, suggesting the sector is thriving even in a high inflation environment.

Insurance income accounts are now presented differently from hitherto as the International Financial Reporting Standards 17 are now used.

Non-Life Insurance Revenue (formerly referred to as premium income) increased from GHc3.9 billion to GHc5.0 billion, representing 28% growth, Life Insurance Revenue increased to GHc2.33 billion, up 36% from GHc1.76 billion in the previous year. Reinsurers enjoyed a surge in Insurance Revenue to GHc897 million, up 37% from the GHc655 million they earned in 2023.

However, as with asset growth, these growth rates are considerably smaller in real, inflation-adjusted terms that they are in nominal terms, at 3.32%, 10.43% and 10.58% for the non-life, life and reinsurance sectors respectively.

The NIC notes that “this means there is a need to shift paradigm by working to expand the current insurance market.”

Non-life insurers reported an aggregate insurance service (formerly referred to as underwriting profit) result of GHc1.18 billion in 2024, a huge increase over the GHc63 million earned in the previous year. The NIC attributes this to the positive performance of key portfolios particularly motor insurance.

The life sector recorded a positive insurance service result of GHc330 million in 2024, reversing the GHc599 million in losses it made from that core activity in 2023.

The post NIC releases insurance Industry wide performance figures for 2024 appeared first on The Business & Financial Times.

Read Full Story