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Financial sector performance boosts market capitalisation

Mon, 15 December 2014 13:25
by Kudzai Chimhangwa
News Flash


Namibia’s financial markets improved owing to sound performance of the insurance, micro lending, pensions, and unit trusts for the last quarter of 2014.
The medical aid funds however recorded a deficit compared to a surplus recorded last year.
Figures released by the Namibia Financial Institutions Supervisory Authority (Namfisa) indicate that the market grew by 2, 7% to N$1, 6 trillion as at end of the second quarter of this year.
This is in comparison to the N$1, 5 trillion recorded during the same period last year.
Market capitalisation is an important aspect that assists potential investors to determine potential returns and risk.
The long and short term insurance industries performed relatively well against the background of various enabling factors.
The Capital Adequacy Ratio (CAR) stood at 6, 94, up by 5, 5% from 6, 58 in the first quarter. The industry assets and policyholder liabilities increased from N$37, 1 billion to N$39, 1 billion and N$31, 6 billion to N$32, 6 billion respectively.
Gross premium income collected during the quarter under review increased by 12% to N$1, 72 billion and this was attributed to the increasing number of active policyholders.
The claims ratio averaged 71% during the quarter, slightly above the 50 to 70% range for the industry benchmark.
Investment income increased to N$1, 32 billion, a development Namfisa attributed to good performance in foreign assets held within the common monetary area.
“The gross written premium of the short term insurance industry totaled N$781 million over the quarter, down by 11, 7% from the previous quarter. Claims also fell by 37, 4% to N$292 million. Investment income increased by 7, 6% to N$41 million,” said Namfisa.
With regard to the short term insurance industry’s solvency ratio, this stood at 26, 1%.
Assets recorded during the period under review stood at N$3, 8 billion compared to liabilities of N$2, 84 billion.
With regard to medical aid funds, a net healthcare deficit of N$30, 4 million was reported at the end of the quarter.
This is in comparison to compared to a surplus of N$20 million at the end of the first quarter.
“Membership, however, went up to 177,620 by the end of the quarter. Assets of the funds totaled N$1, 1 billion while the reserve level was above 50%,” the authority noted.
Micro lenders disbursed loans to the value of N$498 million for the quarter, compared to N$531 million for the previous quarter while the number of loans granted also declined from 169,058 to 163,816.
The total value of the loan book increased by 18, 5% to N$3, 2 billion as at the end of the quarter. The reduction in loans disbursed may indicate that micro lenders applied to more strict assessments for new loans.
Pension funds submit data on an annual basis while contributions received for year ending December 2013 were up by about 14% while fund expenses also increased by 23% compared to the prior year and this is mainly attributed to inflationary increases.
The membership of pension funds increased by 2, 8% for the year due to increasing numbers of employees joining employers with pension funds.
Pension fund assets increased by 23,2% to N$105,2 billion as at end of 2013 and this is mainly attributed to superior positive investment returns, particularly on assets invested in the Common Monetary Area, the authority said.
Total assets under management of collective investment or unit trust schemes increased by 3,1% to N$40,4 billion by the end of the quarter.
Overall, N$19,1 billion of assets were under the management of collective investment schemes in Namibia.
These schemes invested 60,4% of total assets in money market instruments and 21,4% in listed equities.
Total assets of investment managers increased to N$129, 9 billion as at the end of the quarter.
Of this, the managers invested 51.9% in the CMA and off shore, and kept 48.1% of the total assets in Namibia in line with regulatory requirements.
Namfisa noted a total of 106 complaints during the quarter with 43% being related to the micro lending sector, and 25, 5% to pension funds.
At the end of the quarter, up to 80 of the complaints received during the quarter were resolved.
“Most complaints dealt with revealed that consumers do not understand or the financial institutions do not explain exclusion clauses relevant to certain financial products,” the authority said.
A total of 17 registered institutions had their licenses cancelled, of which 12 were voluntary cancellations.
“The consolidated industry statistics on assets, liabilities, surpluses and reserves for insurance, medical aid funds and pension funds indicate that regulated entities are, in general, financially sound,” the authority said.
The comparative levels of contributions received, claims paid and expenses at industry level show that there were no liquidity problems.