Botswana Insurance Holdings Limited (BIHL) has reported impressive financial results in 2023.
This is despite economic headwinds such as inflation, uncertainties around interest rates, and external shocks from geopolitics.
BIHL demonstrated resilience and strategic ability, delivering powerful growth and financial performance.
The year 2023 began with significant economic uncertainty with volatile interest rates impacting investment markets. However, as the year progressed, inflation pressure eased, and the labor markets cooled. This shift alleviated pressure on central banks to continue raising interest rates, leading to an accelerated path of rate cuts in 2024 a resulting rally in the global bond market benefiting offshore portfolios.
One of the main themes locally was the implementation of the Pension Fund Investment Rules (PFR2) in 2023. As pension funds began to repatriate their investments, these regulations resulted in a rise in liquidity in the banking industry. The increase in liquidity raised the possibility of asset bubbles, especially in the real estate sector, where price inflation was evident. In contrast to forecasts of preserving the status quo, the Monetary Policy Committee (MPC) of the central bank shocked the markets in December 2023 by lowering the monetary policy rate by 25 basis points to 2.40 percent.
Botswana’s real GDP growth slowed to 2.9 percent in 2023 from 5.5 percent in 2022. Both the mining and non-mining sectors underperformed, contributing to this decline. Despite these headwinds, BIHL reported a profit of P782 million, a 74 percent increase from the previous year, allowing substantial shareholder dividends, according to its annual report. The group’s assets under management (AUM) grew by 16 percent to P44 billion and the total assets reached P17.9 billion
In terms of operational performance, the BIHL’s life insurance segment led by Botswana Life Insurance Limited delivered stable results. The insurance service result exceeds the prior year by 3 percent driven by strong investment returns. However, new business volumes in both individuals and corporations were significantly down due to economic pressures on households, loss of agents, and business rule changes aimed at improving quality. Nevertheless, strategic interventions reduced policy lapse, and corporate lines showed improvement despite industry pricing pressures.
The BIHL’s asset management arm compromising of the Botswana Insurance Fund Management (Bifm) and Bifm Unit Trust experienced significant growth. Operating profits grew by 20 percent year on year driven by AUM and strong investment returns. Bifm’s AUM increased by 16 percent while the Bifm Unit Trust saw a remarkable 48 percent growth. Net inflows of P401 million were recorded with a significant contribution of P1 billion in December 2023 alone highlighting the unit’s strong performance
BIHL’s associates also contributed varied performances. The group holds 27.91 percent of Letshego Holdings Limited and 25.1 percent of Nico Holdings Limited (Malawi). Letshego’s operating profit was significantly down from the previous year, impacted by the revision in the calculation of expected credit losses and restructuring costs incurred during the year. Nico Holdings showed a strong performance with operating profit up by 51 percent driven by successful results across all its businesses, particularly the NBS Bank.
Looking ahead BIHL said its strategy for 2024 focuses on driving new business growth, enhancing client retention, and investing in human capital development. Important projects include using AI-powered solutions to control lapses and arrears, increasing sales capacity through recruiting drives, and enhancing customer retention through internal conservation efforts. Furthermore, new technological innovations like the JIRA complaints management system and the Mosako onboarding performance are expected to improve operational effectiveness.
BIHL’s performance in 2023 underscores its resilience and strategic adaptability amid economic uncertainty. With strong financial results and a clear vision for future growth, BIHL said it is well-positioned to navigate the challenges and opportunities that lie ahead, continuing to deliver value to its stakeholders and clients.
