BIHL eyes expansion into SADC
Isaac Pinielo | Wednesday September 7, 2016 18:00
One of the reasons for the decision is the intensified domestic competition. BIHL group chief executive officer, Catherine Lesetedi-Letegele said the move is one of the pillars of their five-year strategic plan for 2017-2021.
“We are seeking to expand into attractive SADC (Southern African Development Community) markets and explore in-country opportunities,” she said.
Presenting BIHL results for the six-months period to June 30, 2016, Lesetedi-Letegele said the expansion beyond borders will be done through BIHL’s associates, such as Nico Holdings, which is present in five countries, with associates in Mozambique, Uganda and Tanzania, as well as four subsidiaries in Malawi and one in Zambia.
According to Lesetedi-Letegele, BIHL increased its stake in Letshego Holdings to 25.7%, which has a presence in 10 countries.
Also, she said the group increased its stake in Funeral Services Group (FSG) to 35.6%, which is present in three countries, adding that the group also plans to expand to Zimbabwe in the near future.
The strategy, according to the CEO, also focused on improving and growing existing offerings by delivering growth and strengthening the group’s mature businesses.
Presenting the financial results, the group chief financial officer, Andre Bester said the group’s embedded value decreased to P4.19 billion as compared to the December 2015 year-end level of P4.30 billion. The embedded value allows for P202.4 million of dividends paid during the period.
He noted that the value of new life business remained at P78.9 million compared to the prior period. Value of new business was subdued due to lower annuity business relative to the comparative six months.
“Net premium income decreased 11% year- on-year at P1.145 billion compared to P1.292 billion for the comparative six months,” Bestersaid.
The decrease was attributed to a number of material single premium transactions relating to retirement schemes that were concluded in the first six months of 2015 and were not repeated in 2016.
Recurring premium income grew by an impressive eight percent from P486 million in June 2015 to P530 million during the first six months of 2016.
Operating profit grew from P188 million to P192 million over the comparative six months mainly on the back of the good performance on recurring premium business, which is a more sustainable source of profits in the longer term.
Bester, however, said operating profit for the life business increased by a moderate two percent due to subdued operational earnings from most key business lines under challenging operational conditions.
He noted that the asset management business was adversely affected by underperforming global equity markets while legal insurance business was adversely affected by additional claims provisioning and increased operational costs. “Share of profit of associates witnessed the anticipated increase of 38% due to the increased shareholdings in FSG and Letshego and the recent investments made in associates BIC and Nico Holdings,” said Bester.