In a commentary accompanying the group’s recent results, directors said the financial year had begun with a lot of uncertainty regarding inflation and interest rates across the globe which negatively impacted investment markets. However, as the year progressed, it became increasingly clear that the pressures on central banks to raise interest rates further had substantially reduced.
BIHL’s main businesses are life insurance and asset management, with the former exposed to inflationary trends that affect the affordability for customers, and the latter, interest rate movements, which influence investment returns.
In the year to December 2023, BIHL’s profit before tax from insurance operations increased by 136% compared to the prior year, with the key driver being a 326% increase in investment returns earned on the back of positive fair value gains across assets backing insurance contracts.
The asset management business operating profit for the year excluding the Zambian operation results, was 20% higher than the prior year owing to increased assets under management. Assets under management increased 16% to P44 billion, although the group’s Zambian business experienced challenges.
“The Zambian business operation was the main detractor as it closed the year with a significantly lower operating performance, owing to a once-off positive accounting adjustment recorded in the prior year,” directors stated.
BIHL’s income from associate businesses was also under pressure during the year, with pan-African microlender, Letshego Holdings, again weighing down the group.
“Equity accounted earnings decreased by 64% mainly due to the underperformance from Letshego Holdings as impairments surged,” directors added. “The Nico Holdings Group posted a strong set of results for the year despite the 44% devaluation of the Kwacha against the Botswana Pula which resulted in a P82 million foreign currency exchange loss recognised in the statement of other comprehensive income.”
BIHL holds 30% equity in Letshego and has remained a loyal shareholder to the microlender, riding through recent periods of reduced profit contributions and growth.
Directors said the strategy for 2024 for BIHL involves focussing on driving new business growth, enhancing client retention, and investing in human capital development.
“There is a lot of groundwork that management has laid over the years and will leverage going into the future,” stated the directors.
