Foreign currency transactions to aid insurance sector

04 Jul, 2022 - 00:07 0 Views
Foreign currency transactions to aid insurance sector Chipo Mtasa

The Chronicle

Sikhulekelani Moyo, Business Reporter
GOVERNMENT’S decision to entrench foreign currency transactions into law alongside local currency is crucial in helping the sector preserve value in the face of inflationary pressures while improving service delivery.

FBC Insurance chairperson, Mrs Chipo Mtasa, said this in her statement accompanying the company’s financial report for the full year ended 31 December 2022.

She said the insurance industry was greatly affected by hyper-inflationary environment as premiums booked in local currency are quickly eroded while claims and expenses are incurred in current terms.

Mrs Chipo Mtasa

“The industry welcomes the fact that it can now underwrite business in foreign currency and this aids in value preservation and improves service delivery,” she said.

“Volatility in foreign exchange market continues to weigh down on the industry as a whole with the average cost of claims escalating.”

Mrs Mtasa said the operating environment remains a challenge especially for the insurance industry as corporates and individuals focus on survival due to the effects of Covid-19 pandemic and the hyper-inflation environment.

“The ever-increasing cost of doing business had a negative impact on performance of the industry as a whole.

“Despite all the challenges, the company recorded a positive performance buoyed by strong investment income derived from strong hedged positions and inflation linked assets,” she said.

Meanwhile, Mrs Mtasa said FBC Insurance company has recorded an inflation adjusted profit before tax of $52 million and a profit after tax of $44 million for the year ended 31 December 2021.

She said the business performed well despite numerous challenges encountered during the year.

“Insurance premium revenue for the year ended 31 December 2021 was $969 million and net insurance revenue was $531 million while total net income for the period was $826 million,” said Mrs Mtasa.

“The performance was further enhanced by total net income from investments of $295 million.

“As inflation pressures negatively affected premium revenues, attention has shifted to hedging via a robust investment strategy, which has yielded positive results,” she said. — @SikhulekelaniM1

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