The largest General Insurance Company in Africa’s second largest copper hotspot, with market share of 27.0%, was on June 29 by Global Credit Rating – GCR affirmed at national scale financial strength rating of A+(ZM), with stable outlook. According to the GCR report, Professional Insurance Corporation Zambia – PICZ remains sound in business profile, balancing a strong competitive position with limited premium diversification. Cited in the report was the resilient financial profile which continues to reflecting strong capitalization and intermediate liquidity, despite increased earnings risk from a weakened operating environment characterized by disruptive inflationary pressures.
PICZ remains market leader in the Southern African nations short-term insurance industry, with its share of industry gross premiums growing to 27.0% in FY20, from 21.0% in FY16, while relative market share registered at approximately 5x the industry average. The GCR report forecasts a growth in competitive position, sustained by strong franchise strength and growth initiatives as it gains business from less franchised players.
Professional Insurance Corporation Zambia – Board Chairman Ms. Susan Musoni speaks at the launch of the Financial Report for 2020 earlier in March 2021 at Radisson Blu Hotel.
Premium diversification is however limited, with significant concentration to two business lines, fire and motor, though in line with market norms. The insurer also has single name concentration, with the largest and top five (5) clients accounting for 30% and 45% of gross premiums respectively in FY20.
The report further highlighted widening cost push inflationary pressures from currency depreciation fueling an uptick in costs especially for imported spare parts. This impacted the insurer’s bottom line. FY20 underwriting margins leaned to 4.1% from (9% in FY19 period) as claims increased, with the net incurred loss ratio measuring at 49.2% (45.8% in FY19). Despite lower underwriting profitability, stronger investment income buffered the cost impact through higher yields earned at 16.4% from 13.7% in FY19 from investment in government securities.
Net profitability remained strong, with net return on revenue registering between 11.0% and 14.0% in the past 4 years. Capitalization remained strong with Capital Adequacy Ratio – CAR maintained at 1.8x at FY20 supported by sound internal capital generation and is expected to remain above 1.5x over the outlook horizon under a stressed dividend scenario.
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