In these difficult economic times, not many companies leave alone insurance firms can record desired profits. However, Statewide Insurance Company Ltd (SWICO) recorded a profit before tax of Shs 1.3 billion in the year ended December 2013, up from Shs 1.1 billion in 2012, according to the company’s financial statement released on June 30.
However, the company’s after tax profits spiked to Shs 7.7 billion in 2013 up from Shs 966 million in 2012. Sources said this was largely attributed to the revaluation of the company’s building
-Sure House located on Plot 1 Bombo Rd in the heart of Kampala City, which was last valued more than five years ago. The dramatic jump, therefore, shows the increase in value of the company’s assets (fair value gain component), jumping to Shs 6.7 billion from Shs 172 million in 2013 and 2012 respectively.
The company’s total income marginally went up to Shs 10.3 billion in the year ending December 2013 from Shs 9.7 billion in the same period in 2012.
The other positive indicator was the company’s net premiums, which grew to Shs 9.5 billion in 2013 from Shs 8.7 billion in 2012. The company’s total assets grew by more than Shs 10 billion from Shs 24 billion to Shs 35 billion. But investment in government securities and fixed deposits declined to Shs 4.6 billion from Shs 4.8 billion whereas the company’s investment in equities, statutory deposits and bonds somewhat increased to Shs 1.2 billion from Shs 1.1 billion.
Another positive indicator, according to the company’s financials, is cash and deposits, which increased to Shs 1.8 billion from Shs 1.2 billion during the period under review. However, the company’s total liabilities increased to Shs 12 billion in 2013 from Shs 8.4 billion partly because of the increase in deferred tax – the amount of money supposed to be paid in taxes but has not been remitted for various reasons – which stood at Shs 5.1 billion in 2013 from Shs 1.7 billion. Deferred tax increased because of the increase in the value of the company assets [fair value gain-which is not taxed].
SWICO has been in Uganda for the last over 30 years and is a general insurance company offering a wide range of insurance policies and wholly owned by indigenous Ugandans with 14 branches across the country. The company covers general insurance risks apart from life assurance. In a recent exclusive interview with The Independent, the company’s Technical Manager, Geoffrey Musisi, said the many branches which the company established in all major towns across the country have made it easy for their clients to access the services of the company. “That means we are next to our customers,” he said.
Musisi described the insurance market in Uganda as vibrant, competitive and as one that is growing.
Having over 20 insurance companies serving a growing populationat a rate of 3.2% per year means there is potential in this market in future, according to Musisi.
Insurance penetration in the country is still low at 0.6% of the GDP but players said it will grow upwards because of the new innovations being spearheaded by insurers. A buoyant economy, further reduction in poverty levels and the availability of peace and stability are also seen as other supporting factors that will grow the sector going forward. SWICO recently launched a new policy for schools – the school comprehensive package – covering major risks such as fire and others. Already, this product has received positive results from the market.
Because of the low levels of insurance penetration, Musisi said rolling out new products is costly in terms of research and time. Also, it is difficult to educate and convince people to take on insurance because many people assume losses are far from them. The volatile economy that involves changes in the exchange rate, inflation and interest rates sometimes negatively impacts on the company’s business and the general performance of the entire sector.
There is also a negative perception from the public that insurance companies do not pay their clients when risks occur. SWICO paid out Shs 1.8 billion as net claims in 2013 compared to Shs 2.2 billion in 2012 and Shs 1.9 billion in 2011.
SWICO serves a number of topnotch clients including fuel companies, non-governmental organizations, educational institutions, private enterprises, government bodies and construction companies among others. Some of the company’s products include professional indemnity, marine and aviation, group personal accident, workers compensation, theftburglary, cash in transit among others. Officials said the people who understand the value of insurance are still few in Uganda and that due to a volatile economy most people list insurance at the bottom of their expenses.
Source : The Independent