Contents. Foreword 2. Chairman s Report 5. THE NATIONAL INSURANACE COMMISSION Corporate Information 7 NIC s Operations 8

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1 Contents Foreword 2 Chairman s Report 5 THE NATIONAL INSURANACE COMMISSION Corporate Information 7 NIC s Operations 8 THE INSURANCE MARKET OVERVIEW Economic Review 14 Ghana Insurance Market Report (2007 ) 16 THE INSURANCE MARKET FINANCIAL & RATIO ANALYSIS Introduction 27 Perfomance Indicators (Life Companies) 30 Perfomance Indicators (NonLife Companies) 43 APPENDICES 1. Report of the Directors Report of the Auditors Income and Expenditure Account and Accumulated Fund Balance Sheet Cash Flow Statement Accounting Policies Notes to the Financial Statements List of Registered Insurance Companies List of Registered Reinsurance Companies List of Registered Broking Companies List of Registered Loss Adjusting Companies List of Registered Reinsurance Broking Companies 95 1 NIC

2 Foreword SIGNIFICANT PROVISIONS UNDER THE DRAFT INSURANCE BILL The National Insurance Commission has been working to upgrade the legal and regulatory framework for the regulation and supervision of the insurance sector in Ghana. This became necessary due to some significant problems with the existing Act, which has also become outdated. The Commission therefore decided that it would be better to propose to Government that a new Insurance Act be enacted. The draft bill has been forwarded to Cabinet through the Minister of Finance and Economic Planning. NEW ICP S The International Association of Insurance Supervisors (IAIS) has issued a completely new set of insurance core principles (ICPS). The ICPS which have been adopted, are the current international standards for the regulation and supervision of insurance. They are very much more comprehensive than the existing ICPS. The Commission has therefore been able to take full account of the new ICPS in developing the new legal and regulatory framework. We shall now examine some of the significant provisions; GHANA INSURANCE REGULATORY AUTHORITY The body Corporate established under Section 1 of the Insurance Act 2006 is preserved and will continue to be the corporate but after the act has come into force; it is to be known as the Ghana Insurance Regulatory Authority. The bill makes some important changes, primarily in relation to the functions and governance of the authority. These are aimed at providing more certainty, and clarity in relation to the objective and functions of the Authority and in tightening Corporate Governance. GOVERNANCE AND MANAGEMENT The existing Act is silent on Corporate Governance and Management. Although detailed requirements are set out in the Code, the Bill sets out the general requirement for the governance framework for insurers and requires insurers to establish a risk management strategy and policies. The Bill sets out specific types of risk that must be covered and these are extended in the code. A licensed insurer shall take reasonable care to maintain a clear and appropriate apportionment of significant responsibilities and among its directors, senior managers and key functionaries so that; NIC 2

3 i. It is clear who has which of these responsibilities ii. There is appropriate separation of the oversight function from the management responsibilities An appropriate Corporate Governance Structure in the industry is of concern to the National Insurance Commission hence the Commission has also drafted a Code on Corporate Governance for the Insurance Industry. MICROINSURANCE The Commission has undertaken considerable work on designing an appropriate Microinsurance framework. In summary the aim has been to design a framework that provides legal certainty and that provides some incentives to insurers to design and sell Microinsurance products. The Regulation and the Code together provide the following general features: i. It is proposed that insurers should be given the power to designate an insurance product as Microinsurance ii. It is proposed that the insurance code will provide that insurers cannot designate a product as Microinsurance unless it considers that the product satisfied the following (product) criteria. a. Targeting low income households b. Affordable for low income households c. Accessible for low income households The proposed framework includes the following incentives; i. The Microinsurance product will not have to be approved by the Commission. Instead, the insurer will be required to file the product, but may start using it after a period of (4) four weeks, unless the Commission objects. ii. It is intended that Microinsurance policies will be able to be sold by certain categories of unlicensed insurance agent. The Commission will determine the category of permitted unlicensed agent following the completion of a Microinsurance survey. iii. Insurers will be able to rate Microinsurance product on a community basis as opposed to individual basis. The Commission considers that, in order to protect the Microinsurance policyholder, the following additional requirements should apply to Microinsurance products; i. A Microinsurance contract will be required to be written in clear and straightforward language, with minimised use of legal and technical language. ii. To be readily understood by low income persons. iii. To contain no or few exceptions. iv. Microinsurance claims must be dealt with expeditiously. v. Claims must be determined (7) seven days of receipt and payments made within (10) ten days of receipt of the claim. 3 NIC

4 CAPITAL AND CAPITAL ADEQUACY The Bill adopts capitalbased requirements as opposed to a solvency margin approach. Although the detailed requirement will not be riskbased, the language in the Bill is designed to enable the Authority to adopt riskbased capital adequacy requirements in the Code at a future date without the need to amend the Act. The adequacy of capital of insurers will be determined by comparing the Available Capital Resources with the Solvency Capital Required. These are few significant provisions of the New Insurance Bill which were drafted by a Consultant and reviewed by the National Insurance Commission. NIC 4

5 Chairman s Report A number of important activities were done by the National Insurance Commission. In the foreword we have highlighted significant provisions of the draft Insurance Bill. A lot of work was done reviewing the draft Insurance bill with the Consultant in. Workshops were organised for the Insurance Industry to debate the provisions of the new Insurance bill. GUIDELINES FOR ANTIMONEY LAUNDERING Work was done on anti money laundering and combating the Financing of Terrorism in compliance with the AML/CFT recommendations of GIABA and FATF. GIABA is the intergovernment action group against money laundering in West Africa, which was formed by ECOWAS memberstates in 2000, to promote and coordinate the regional AML/CFT efforts. The mandate of GIABA includes ensuring the adaptation of standards against money laundering and the financing of terrorism in accordance with acceptable international standards and practices including the FATF 40+9 recommendations. Following the enactment of anti money laundering ACT, 2008(ACT 749), the National Insurance Commission in collaboration with the Financial Intelligence Centre (FIC) developed guidelines for Insurance Practitioners licensed by the National Insurance Commission. The guidelines in a booklet form, were subsequently launched by the National Insurance Commission. ACCOUNTING MANUAL In the year under review Accounting Manuals for both Life and NonLife Companies were completed. These manuals will assist the companies to produce their accounts using the International Financial Reporting Standards (IFRS) of accounting. This was a project under the (EMCB)Economic Management and Capacity Building of the Ministry of Finance and Economic Planning funded by the World Bank and other donor partners. INDUSTRY PERFORMANCE There was growth in market premiums for both the Life and NonLife Insurance Companies. Gross premium for the year totaled GH 628.5million representing a growth of 37.2% over the previous year. There has been a positive growth in premiums since 2009 and this is very encouraging. NonLife Insurance premiums rose from GH 142million in 2007 to GH 358million in. Ghana s oil find and effective implementation of the compulsory insurance of commercial buildings may have contributed to this positive trend. Life Insurance premiums also increased from GH 187.3million in the year to GH 270.1million in. However in terms of growth rate, there was a fall of 9% from 52.95% 5 NIC

6 in to 44.2% in. There is still a vast potential for growth in this sector. Many Life Companies have introduced innovative products and we believe that will contribute to a positive trend in growth in the future. Other key indicators of the industry performance is summarized below: Life ( m) ( m) Growth(%) Total Assets % Total Investments % Actuarial Liabilities % Total Capitilisation % NonLife ( m) ( m) Growth (%) Total Assets % Total Investments % Actuarial Liabilities % Total Capitilisation % INSURANCE PENETRATION In spite of the positive growth, insurance penetration in the country is still very low. The finscope survey which was commissioned by the Government of Ghana on the financial sector concluded that excluding those with the national health insurance, only 5% of the population have an insurance product. Insurance penetration which is defined as the contribution of total insurance premiums to GDP is still 1 %( one percent). This can be compared to South Africa14.8%, Namibia 7.3%, Kenya 2.8%, Nigeria 0.6% and Malaysia 4.8% (Source Swiss Re Sigma Report). The National Insurance Commissioned has therefore actually supported the development of Microinsurance products for the informal sector with the hope that this will increase the insurance penetration in the country. Regulations for Microinsurance are part of the draft Insurance Bill which will in future be passed by Parliament. AGRICULTURAL INSURANCE The Ghana Agricultural Insurance Program (GAIP) has started its work with the insurance of maize in the northern part of Ghana. The Ghana Insurers Association (GIA) has a technical management unit (TMU) which does the underwriting of this business on its behalf. It is the hope that insurance will be extended to cover other crops like rubber, cocoa, in other parts of the country and also cover livestock. Insurance of farmers is a landmark for the country and it is the hope of the National Insurance Commission that the Ghana Agricultural Insurance Programme will grow and expand in the future. CONCLUSION The National Insurance Commission is hopeful that the draft Insurance Bill will be passed in the near future by Parliament. It is also the expectation that development of Microinsurance products will help to increase the low insurance penetration in the country. NIC 6

7 Corporate Information Board of Directors: Mr. Frederick Quayenortey Chairman Mrs. Nyamikeh Kyiamah Commissioner of Insurance Other Directors Secretary: Mr. Samuel Amankwah Mr. Justin Amenuvor Dr. Albert Gemegah Ms. Sarah Fafa Kpodo Mr. Emmanuel Baba Mahama Mrs Emma Ocran Management Team Mrs. Nyamikeh Kyiamah Commissioner of Insurance Mr. Simon N. K. Davor Ag. Deputy Commissioner of Insurance Mrs. Emma Ocran Legal Director Mr. Michael Kofi Andoh Head, Supervision Mr. Joseph Bentor Head, Finance & Administration Mr. Isaac Buabeng Head, Marketing, Research & External Relations Mr. Martin Dornor Abayateye Internal Auditor Auditors: Bankers: AADS Consult (Chartered Accountants) Republic House 5th Floor Accra SGSSB Bank Limited Merchant Bank (Ghana) Limited Cal Bank Limited Ghana Commercial Bank HFC Bank (Ghana) Limited Registered Office Insurance Place & Principal Place No. 67 Independence Avenue of Business P. O. Box CT 3456 Cantonments Accra 7 NIC

8 NIC Operations LICENSING Insurance Companies One nonlife insurer i.e. Millennium Insurance Company Limited, was licensed in. Insurance Brokers The underlisted five (5) insurance broking companies were licensed in the year ; 1. Legacy Protect Limited 2. Eureka Insurance Brokers Limited 3. Corporate Trust Insurance Brokers Limited 4. First Choice Insurance Brokers Limited 5. GIBA Energy Insurance Brokers Limited AGENTS Corporate Agents: The following companies were licensed as intermediaries under the bancassurance partnership arrangement. Bayport Financial Services Limited Enterprise Life Assurance Co. Ltd. Consumer Finance Company Limited Enterprise Life Assurance Co. Ltd. Agricultural Development Bank Limited Vanguard Life Assurance Co. Ltd. Tied Agents: A total of 695 new agents were licensed in the year bringing the official overall total to 3,300 besides those for the bancassurance partnerships. CHANGES IN CONTROL UT Holdings was granted approval to acquire 60% equity share in Golden Life Insurance Company Limited. The name of the company has since been changed to reflect the new ownership. COMPLIANCE Reinsurance Premium Transfer: In pursuance of Section 53 of the Insurance Act, 2006, a number of companies applied for approval to transfer reinsurance premiums to their overseas partners as part of their risk mitigation measures. In total, an amount of US$3.53million, 18,812, 115,352 and the dollar equivalent of GH 732,600 was approved for offshore reinsurance placements. NIC 8

9 PRODUCT APPROVALS The underlisted products of four companies were approved by the Commission in the year. Company Express Life Insurance Co. Ltd. Donewell Life Company Ltd. Star Life Ass. Co Ltd. Star Life Ass. Co Ltd. Star Life Ass. Co Ltd. Star Life Ass. Co Ltd. Unique Life Ins. Co. Ltd. Enterprise Life Assurance Co. Ltd. Enterprise Life Assurance Co. Ltd. Enterprise Life Assurance Co. Ltd. SIC Life Company Ltd. International Energy Ins. Co. Ltd. Ghana Union Assurance Co. Ltd. Ghana Union Assurance Co. Ltd. Quality Insurance Co. Ltd. Star Assurance Co. Ltd. Product Loan Protection Plan (Group/Individual) Future Scholarship Plan (Silver/Platinum/Gold) Family Protection Plan Cash Builders Plan Child Life Plan Loving Provider Plan Ulife Takaful Plan Lady Care Plan Funeral Finance Plan Life Time Needs School Fees Plan Home Care Plan Travel Insurance Home Loan Guarantee Quickie Insurance Default Insurance Program Class of Business Life Life Life Life Life Life Life Life Life Life Life NonLife NonLife NonLife NonLife NonLife LEGAL MATTERS Enforcement Actions against Insurance Companies: During the year, sanctions were leveled against Companies that had breached various Sections of the Insurance Act 2006, (Act 724). Fourteen (14) Nonlife Insurance Companies, Twelve (12) Life Insurance Companies and Eight (8) Broking Companies which failed to submit their Actuarial Valuation Report and/or Audited Financial Report on the due date were each made to pay penalties as prescribed under the Insurance Act 2006, Act 724 for the breach. Establishment of a Fire fund: For year, the NIC worked on the establishment of the Fire fund. Section 185 of the Insurance Act 2006 (Act 724) enjoins the Commission to set up and manage a Fire Maintenance Fund. The object of the fire fund is to provide funds and equipment to state institutions assigned with fire fighting functions and such other organizations as the Commission may determine for the purpose of fighting fires. A committee has been set up constituting officers from the NIC, GIA and the GNFS. The committee is working on guidelines for its operations. 9 NIC

10 MOTOR GUIDELINES COMMITTEE Section 44 (4) of the Insurance Act 2006 (Act 724) requires the Commission in consultation with the Insurance Industry to prescribe a formula to compute the compensation in respect of Injury and Deceased claims arising out of a motor accident. In fulfillment of section 44 (4) a Committee made up of officers from the NIC, GIA and GIBA was constituted in August to come out with a formula and other recommendations to the Commission. The work of the committee is to ensure standardization of motor injury/deceased compensation within the industry. It is expected that the schedule of compensation will guide the courts in the awards of their judgment. COMPLAINTS AND SETTLEMENTS BUREAU In the year, the Bureau continued to receive complaints from the public against some Insurance Companies. As has been the trend in previous years, most of the complaints received, related to motor claims. The areas of common complaints from persons pursuing motor claims were as follows:»» Repudiation Of Claim By Insurers»» Delay In Settlement Of Claims»» Dispute Over Quantum»» Delay In Payment Of Settled Claims. The areas of complaints from life policyholders were as follows:» Benefits promised by Insurers differ from benefits on policy documents.» Insurance company s failure to cease deductions after Policy had been surrendered» Payment of low surrender values» Delay in processing matured policies for payment» Delay in returning refund of wrongful deductions» Unauthorized premium deductions NIC 10

11 Two hundred and twelve (212) complaints were received from the public against some Insurance Companies during the year under review. Insurance Companies Uninsured SIC Insurance Company Limited Donewell Insurance Company Limited Unique Insurance Company Limited IGI (Ghana) Company Limited Enterprise Life Assurance Company Limited Provident Insurance Company Limited Star Assurance Company Limited Quality Insurance Company Limited Enterprise Insurance Company Limited Metropolitan Life Insurance Company Limited NSIA (Gh.) Insurance Company Limited Metropolitan Insurance Company Limited Regency Alliance Insurance Company Limited Equity Assurance Company Limited GLICO Life Ecowas Brown Card Vanguard Assurance Company Limited Ghana Life Insurance Company Limited Express Life Assurance Company Limited Prime Insurance Company Limited Beacon Insurance Company Limited Glico Insurance Company Limited Intercontinental Wapic Insurance Company Limited Edward Mensah Wood & Associates Star Life Assurance Company Limited UT Life Insurance Company Limited SIC Life Insurance Company Limited Donewell Life Insurance Company Limited Quality Life Insurance Company Limited Ghana Union Assurance Company Limited Total No. of Complaints NIC

12 MOTOR COMPENSATION FUND The Motor Compensation Fund set up in 1996 to compensate persons who suffer injuries or die in a motor accident but who are unable to get compensation from an Insurance Company for various Insurance provision(s) continued to petition the Fund for compensation. The Compensation Fund Committee is made up of Officers from the National Insurance Commission (NIC) and Insurance Companies that underwrite Motor Insurance business. The Commissioner of Insurance is the Chairperson of the Committee. The Committee continued with its core functions of making Awards to persons. It also intensified the publicity and Public Educational Programme on Motor Insurance and Life Insurance. AWARDS SUBCOMMITTEE The Awards Subcommittee of the Motor Compensation Fund Committee held Eighteen (18) sittings during the year. A total amount of Two hundred and fiftyfour thousand, seven hundred and ninetyeight Ghana cedis (GH 254,798) was paid as compensation to One Hundred and Sixtyfour (164) applicants from the Fund. The reasons for petitioning the Fund were as follows:» Uninsured vehicles» Hit and run» Breach of policy conditions such as;» Change of ownership» Inappropriate driving licence» Driving without a licence A breakdown of awards over a fiveyear period is as follows: Year No. of Awards Total Amount (GH ) Average Claim Per Award (GH ) , , , , , , , , , During the period under review, the Fund realized a total income of Five Hundred and Eightyseven Thousand Three Hundred and Thirteen Ghana Cedis (GH 587,313) made up of Motor contributions from Insurance Companies, investment income and interest earned on bank deposits. Expenditure included compensation to accident victims, public education and general expenses. This totaled Three Hundred and Ninetyeight Thousand and Fortyone Ghana Cedis (GH 398,041). NIC 12

13 Investment income, made up of Equity and other shortterm investments stood at One Million Eight Hundred and Fourteen Thousand, Three Hundred and Ninetynine Ghana Cedis (GH 1,814,399). SPONSORSHIP OF INSURANCE INDUSTRY PUBLICITY ACTIVITIES During the year under review, the Commission with the support of the Motor Compensation Fund Committee continued to promote Public Education on Insurance, especially Motor Insurance. The Commission carried out public education programmes in the Regional and District Capitals. The educational team visited Kumasi, Ashanti Mampong, Koforidua, Suhum, Asamankese, Accra, Ada, Kasseh, Ho and Hohoe to educate commercial drivers and the general public on the role and functions of the NIC, Complaints and Settlement Bureau and Compensation Fund, Micro Insurance, Motor Insurance in particular and Life Insurance in general during the year under review. In all, the public education in the Regions were successful and worthwhile. It served the purpose for which it was carried out. There were phonein calls from the public and this gave the officers the opportunity to clarify matters to the public. They were also advised against the purchase of fake motor insurance policies. Public response has since then been encouraging. The Complaints received by the department during the year has increased tremendously as a result of the Public Education carried out.. At the various radio stations and the public fora, the public requested that NIC offices should be established in at least the Regional Capitals. This they noted will cut down on cost and time. The public observed that instead of travelling to Accra or Kumasi to lodge their complaints; the contact offices will receive the complaints and forward them to Accra for consideration. OPERATIONS OF THE KUMASI AND TAMALE OFFICES During the year under review, The NIC continued to oversee the activities of its regional offices in Kumasi and Tamale. The intention of the regional offices is to bring the activities of the NIC closer to the public and to encourage public patronage of insurance business. The Tamale office caters for the Northern sector of the country whilst the Kumasi office serves the Middle Belt of the country. They aim to disseminate information to the Insurance companies and the public. The two offices carried out their core activities mainly, to receive complaints from the general public and seek to resolve them. Where complaints were beyond their capacity, they were referred to the head office in Accra. 13 NIC

14 The Insurance Market Overview Economic Review Most developed economies, especially the Euro zone were severely challenged in with Greece and Portugal (whose economy shrink by 2.3%) needing a bailout. Ireland also took a bailout while many more adopted various economic adjustment programmes. Consequently, most of them including France and Italy were downgraded by rating agencies. While Japan had to overcome the earthquake and tsunami which led to the shrinking of its economy by 0.5%, the USA which was also downgraded had to gabble with overbearing debt, compelling Congress to raise its debt ceiling by $1.3t. The world economy recorded an average of 3.8% in GDP growth, while the advanced economies recorded 1.6%, (Eurozone: 1.5%). Stock markets in these countries therefore recorded deficits by the close of the year. SubSaharan Africa on the other hand recorded an average growth of 4.9% in GDP mainly as a result of favourable commodity prices and improved output. The Ghanaian economy with the production of oil recorded an impressive growth of 14.4% ranking among the best performing economies in the world. The service sector continues to be the leading contributor to GDP, contributing 48.5%. External reserves stood at $5, million which is equivalent to 3.2 months of imports (: $4, million). Despite recording a very positive return of 18.89% by the middle of the year, the Ghana Stock Exchange ended with a negative return of 3.1%, pulled down mainly by stocks in the finance subsector following withdrawal by foreign investors, effectively reversing the strong performance recorded in the first half. As a result of the listing of oil giant Tullow oil, total market capitalization at the end of the year had more than doubled to GH billion (: GH billion). INFLATION Inflation, targeted at 9.0% recorded its lowest rate in 10 years at 8.39% in July. Although it rose during the first quarter after the upward review of petroleum prices, it however declined during the second quarter and remained firmly anchored within the single digit band throughout, ending the year at 8.58%. EXCHANGE RATE The Ghana Cedi remained relatively stable during the year, particularly during the first eight months. It however weakened during the last four months of the year. By the end of the year, the Cedi had depreciated by 4.9% against the US Dollar, 9.0% against the Pound and 7.9% against the Euro. NIC 14

15 INTEREST RATE Interest rate generally declined in, underpinned by significant decline in inflation projections. In response to the easing inflation expectations, the Bank of Ghana reduced the prime rate by 100 basis point from 13.5% to 12.5%. This was reflected in the average base rate of banks which declined from 25.79% to 22.47%. The benchmark 91Day Treasury bill interest rate declined from 12.68% to 9.25% by the end of the year. Similarly, the 182Day Treasury bill closed the year at 10.23% from 12.68%. OUTLOOK FOR 2012 The global economy is still exposed to further financial turmoil in the months ahead as investors continue to worry about the debt crises in the Eurozone although subsaharan Africa is expected to do well. Inflation is expected to edge downwards as global commodity prices drop back and demand conditions weaken. In Ghana, the economy is expected to grow by 8% with oil being the main catalyst while inflation is projected to remain within the singledigit band. 15 NIC

16 Ghana Insurance Market Report 2007 INTRODUCTION The NIC licensed one nonlife insurer and five broking firms in the year. This brings the total number of registered companies as at the end of year as:» Nonlife 24» Life 18» Reinsurers 2» Brokers 53 (includes one Reinsurer and one Loss Adjuster) INDUSTRY PERFORMANCE The market premiums for both life and nonlife continued to increase. Gross premium for year totaled GHC 628.5million representing a growth of 37.2% over the previous year. There has been a positive growth since 2009 as indicated in the table below, and this is very encouraging. Table 1: Growth in Total Gross Premium Income (NonLife and Life) 2007 Year Premium Income (GH ) 209,554, ,255, ,973, ,117, ,528,775 Growth Rate NIC 16

17 GROSS NONLIFE PREMIUM INCOME Nonlife insurance has always contributed a higher premium than life business. Gross premiums for nonlife rose from GHC142million in year 2007 to GHC358.3million in. The rate of growth has been positive since 2009 at 18% and increasing to 32.3% in. Ghana s oil find and effective implementation of the compulsory insurance of buildings may have contributed to this positive trend as shown in the below. Table 2: Growth in Gross Premium Income (NonLife) 2007 Year Premium Income (GH ) 142,020, ,010, ,704, ,773, ,352,702 Growth Rate GROSS LIFE PREMIUM INCOME Life insurance premium also increased from GHC187.3million in year to GHC270.1million in. However, in terms of growth rate, there was a fall of 9% from 52.9% in to 44.2% in. There is still a vast potential for growth in this sector. For several years, the life sector has recorded a much higher growth than the nonlife. This may continue for a while with a little more innovation with respect to product development and the discovery of new distribution techniques. Table 3: Growth in Gross Premium Income (Life) 2007 Year Premium Income (GH ) 67,534,641 91,245, ,269, ,343, ,176,073 Growth Rate NIC

18 Table 4: Company Performance Gross Premiums (NonLife) Company Activa International Allianz Insurance Colina Insurance Company Limited Donewell Insurance Company Limited Enterprise Insurance Company Limited Equity Insurance Company Limited Ghana Union Insurance Company Limited Glico General Insurance Company Limited Industrial & General Insurance Limited* International Energy Insurance Company Limited Intercontinental Wapic Insurance Company Limited Metropolitan Insurance Company Limited NEM Insurance Ghana Limited. NSIA Insurance Ghana Limited Phoenix Insurance Company Limited Prime Insurance Company Limited* Provident Insurance Company Limited Quality Insurance Company Limited. Regency Alliance Insurance Company Limited SIC Insurance Company Limited Star Assurance Company limited Unique Insurance Company Limited Vanguard Assurance Company Limited TOTALS Note: * 10 % growth in gross premium projected 2007 (GH ) 2,999,352 97,309 7,213,879 16,535,000 5,606,553 3,285,972 1,234,769 12,556,397 3,918,000 2,412, ,400 3,418,442 4,210,820 52,805,558 10,114,789 3,943,889 11,219, ,020, (GH ) 6,163,021 64,740 9,425,567 19,886, ,530 7,596,910 7,187, ,263 1,008,250 15,116,792 5,336,000 6,047,784 1,368,547 3,697,996 5,888, ,661 58,032,081 15,888,616 4,383,577 18,296, ,010, (GH ) 10,057,500 9,064 9,026,829 26,403,000 2,670,474 7,651,922 5,771, ,538 4,936,276 2,175,288 22,683, ,251 6,233,000 6,654,036 1,794,434 4,873,671 5,280,697 2,057,774 56,877,215 19,132,991 4,092,148 21,130, ,710,940 (GH ) 10,759,270 4,757, ,833 11,559,429 28,163,000 4,268,595 8,942,741 10,017,757 1,263,596 7,103,264 4,828,563 25,773,108 1,658,443 3,377,982 9,041,992 1,603,834 6,336,457 7,072,253 2,534,504 64,042,765 28,168,710 4,257,898 24,859, ,773,967 (GH ) 9,670,223 10,011,751 1,612,502 12,609,482 34,419,000 6,511,807 9,090,973 25,298,423 1,389,955 8,160,206 8,280,493 32,484,813 2,023,009 5,312,421 14,431,147 1,764,217 7,941,746 10,710,196 3,900,365 79,690,362 35,836,316 4,679,480 32,523, ,352,702 NIC 18

19 Table 5: Company Performance Gross Premium (Life) Company Colina Life Insurance Company Limited Capital Express Assurance (Gh) Limited Donewell Life Insurance Company Limited Enterprise Life Assurance Company Limited Express Life Assurance Company Limited Ghana Life Insurance company Limited Ghana Union Assurance Company Limited Glico Life Insurance company Limited IGI Life Insurance company Limited* Metropolitan Life Insurance Ghana Limited Phoenix Life Insurance company Limited. Provident Life Assurance Company Limited Quality Life Assurance Company Limited SIC Life Insurance company Limited Starlife Assurance Company Limited Unique Life Assurance Company Limited UT Life Insurance Company Limited Vanguard Life Assurance Company Limited TOTALS Note: * 10 % growth in gross premium projected 2007 (GH ) 83,003 3,866,990 10,147,887 2,269, ,113 10,656,011 70,636 4,820,000 1,038,761 1,068,488 1,317,270 21,218,773 5,603, , ,000 3,853,238 67,534, (GH ) 3,596,668 15,429,897 2,742, ,157 12,048, ,448 6,705,000 1,330,109 3,600,450 1,705,802 27,751,000 8,196, ,149 1,143,659 5,795,933 91,245, (GH ) 90,138 4,784,553 23,310, ,071 3,011,222 1,238,603 16,643, ,183 7,222,000 1,900,000 4,129,488 2,576,071 33,869,675 12,331,191 1,282, ,990 8,647, ,269,456 (GH ) 46,541 99,152 6,351,950 40,104, ,208 3,892,880 1,592,411 21,063, ,887 10,771,000 2,702,722 9,008,845 3,439,827 48,042,703 18,036,562 2,692,101 1,450,978 17,032, ,343,779 (GH ) 41, ,067 7,179,000 61,511,588 1,165,864 1,165,864 6,180,483 34,421, ,575 13,942,000 3,730,780 16,105,733 4,715,195 72,065,616 27,360,244 3,323,526 2,712,468 13,748, ,176, NIC

20 REINSURANCE PREMIUM INCOME The performance of the reinsurers has followed the same pattern as the direct insurers. However, anytime there has been a decrease or increase in growth rate, that of the reinsurers had been very significant. For instance whereas there was a fall of 9% growth in life premiums between and for direct insurers, reinsurers experienced a dip as high as 42.1% even though Mainstream Reinsurance Company Limited has restarted underwriting life business. Table 6: Growth in Gross Premium Income Reinsurance (NonLife) 2007 Year Premium Income (GH ) 38,399,239 53,383,694 56,780,084 52,768,054 56,114,292 Growth Rate This turn of events could be attributed to a number of reasons including the possibility of an adverse effect of the withdrawal of the 20% compulsory cession to Ghana Reinsurance Company Limited. It is also likely that insurance companies have begun increasing their own capacities in preparation for the proposed recapitalization in 2012 Table 7: Growth in Reinsurance Gross Premium Income (Life) 2007 Year Premium Income (GH ) 541,500 1,156,607 1,528,296 2,521,068 3,097,988 Growth Rate NIC 20

21 Competition has intensified now that the legal cession has been scrapped. Local reinsurers must consider ways of differentiating themselves to enable them be counted. PREMIUM INCOME BY CLASS OF BUSINESS (2007 ) Motor insurance has always contributed the highest in terms of gross premiums for the nonlife class. Market premium for this line of business for year was GHC162.4 representing 25.8% of the entire premiums. Although the above amount showed an increase of GHC38.9million over the previous year s earning of GH million, there was a fall in market share of 1.2%. This has been the trend since The second highest market premium came from Accident business. Its gross premium for was GHC78.9 million and a market share of 12.6%, representing the lowest within the 5year period. There has been some fluctuation in terms of growth between 12.6% and 17.7%. Fire insurance made an annual income of GHC77.7 million and market share of 12.4%. Like accident, growth rate has seen some fluctuation between 11 and 14% over the period. The market has begun the implementation of the compulsory insurance of all commercial buildings and it is hoped that this will help boost the income for this line of business. Marine insurance s share of market premium more than doubled between and from GH 13.7 million to GH28.8 million respectively. However, this signified a growth of about 1.6% in market share. It is expected that the effect of Ghana s oil find will be felt in the industry as a whole. It should also be possible to make the insurance of all imports obligatory. The life sector experienced a progressive growth during the period, rising from 30% in 2007 to 43% in. Gross premium for life was GHC270 million in from a humble beginning of GHC67 million in 2007, and still shows a high potential for growth especially with the development of innovative products and improvement in the channels of distribution. 21 NIC

22 Table 8: Premium Income Distribution By Class of Business 2007 CLASS 2007 (GH ) % 2008 (GH ) % 2009 (GH ) Motor 69,068, ,446, ,735,687 Accident* 37,917, ,344, ,847,550 Marine 9,964, ,108, ,943,457 Fire 24,646, ,061, ,061,172 Others** 423, ,049, ,154,637 Life/Health 67,534, ,245, ,269,456 Total 209,554, ,255, ,973,719 Notes: *Accidents includes General Accident, Workmen Compensation, Personal Accident and Engineering. ** Others includes travel insurance and bonds % (GH ) 123,911,210 71,838,607 13,660,848 56,228,355 5,995, ,059, ,694,746 % (GH ) 162,419,698 78,923,965 28,813,707 77,750,470 10,444, ,176, ,528,775 % NIC 22

23 Table 9: Premium Income by Class of Business () Class of Business Motor General Accident Workmen s Compensation Personal Accident Engineering/CAR Marine Cargo Marine Hull/Aviation Fire Others (incl. Travel, Bonds) Total Amount (GH ) 162,419,698 52,616, ,588 15,164,577 10,308,292 27,461,782 1,351,925 77,750,470 10,444, ,352,702 THE BROKER MARKET Four (4) new broking firms were licensed bringing the total number of insurance brokers including a Reinsurance broker and a loss adjuster in the industry to fiftyfour (53) in the year. PERFORMANCE OF THE BROKING COMPANIES The total brokerage for the year was GHC20.6million representing an increase of 22.1% over the previous year s amount of GHC16.9million. The rate of growth in earnings has shown a downward trend since year 2007 and has just started to rise as indicated in table 10 below. Table 10: Brokerage Earned (2007 ) Company 2007 (GH ) 2008 (GH ) 2009 (GH ) (GH ) (GH ) AG & Assoc. 129,145 22,311 44,409 All Risks 251, , , , ,757 Allied 11,198 19,354 11,727 44,747 47,727 Alpha 263, , , ,001 Akoto Risk 190, , , ,316 Apex 32,421 40,643 50,330 94,381 71,197 Ark 45, ,520 55,178 73, ,278 Ascoma*** 112, , ,773 94, ,773 Asterix 7,344 34,364 61,061 66,106 Ceris Int l 66,116 70, , , ,423 CLAIM Ltd. 252, , , , ,647 Crown 290, , , , ,705 Danniads 332, , , , ,681 Double D & M 76,104 73,183 80,501 54,302 41, NIC

24 Dynamic 19,543 60, , , ,067 Edward Mensah 1,080,230 1,610,991 2,052,984 2,153,277 2,859,838 First Anchor 21,777 52, , , ,226 Ghana Int l ns. 5, , , , ,316 Global Impact 55,666 57,229 57,948 57,116 67,658 Gras Savoye 3, , , ,702 1,427,360 Horizon 226, , , , ,857 Insurance Centre 39,519 49,695 59, ,399 63,786 Insurance Consult. 180, , , , ,096 Insurance Solutions 218,662 Int l Consort. 36,970 40,717 41,418 22,512 63,997 InterAfrica*** 6,524 15,747 23,222 25,544 28,098 Jerock*** 43,637 58,616 61,967 68,164 74,980 KAV 18,122 KEK 2,191,152 2,756,246 3,868,654 4,600,233 4,776,576 KEK Reins. 63, , , , ,945 Lordship 39, , , , ,701 ManyoPlange 19,278 28,502 40,196 44,215 Marine & Gen. 193, , , , ,407 Maxpal Interm. 58,911 65,901 86, , ,443 Midas 38, , , ,809 Premier Brokers 10,240 13,881 Progressive 56,399 67, , , ,234 Prudent 77, , , , ,654 Risk Mgt. & Adv. 2, ,121 Safety 324, , , , ,726 Saviour 19,155 68,152 65,287 51,952 53,432 Shield 23,135 84, ,417 TransNational 150, , , , ,510 TriStar 264, , , , ,614 Universal 127, , , , ,323 TOTAL 6,945,054 10,144,705 13,983,561 16,907,668 20,656,607 Earnings of top 10 companies 5,406,685 7,316,093 10,315,913 11,939,132 14,124,111 Percentage of top 10 companies 77.8% 72.1% 73.7% 70.6% 68.4% Note: ***A 10% increase in gross earnings has been projected for companies whose audited accounts for year had not been submitted as at the time of this report. NIC 24

25 Individual company performance confirms the high level of competition among brokers especially with the new additions. It is also an indication of how hard some are working. For instance, Midas Insurance Brokers Limited earned enough to be ranked among the top 10 brokers. The NIC expects brokerage to increase significantly in subsequent years due to the oil find. Table 11: Growth in Commissions Earned 2007 Year Commission Earned (GH ) 6,945,054 10,144,705 13,983,561 16,907,668 20,656,607 Growth Rate The table below compares the commission income of the top ten broking firms to the total industry commission income. There has been an inverse relationship between the absolute amounts and rate of growth since year Whereas brokerage has doubled between 2008 and, rate of growth has dwindled by 5.3%. KEK, Edward Mensah, Wood & Associates, Gras Savoye Ghana and Crown Insurance Brokers Limited maintained their positions of 1st to 4th respectively, whilst TriStar Insurance Services Limited had the fifth highest commission. Interestingly, the five highest earners contributed GHC10.8million out of the GHC14.1million (top 10 earnings) representing 76.6%. KEK Insurance Brokers Limited contributed 23.1% of the total brokerage earned in year whilst Edward Mensah, Wood and Associates Limited had 13.8%. 25 NIC

26 Table 12: Contributions of Top 10 Companies 2007 Year Commission Earned (GH ) Earnings by Top 10 Companies Percentage Earnings ,945,054 5,406, % ,144,705 7,316, % ,983,561 10,315, % 16,907,668 11,939, % 20,656,607 14,124, % INSURANCE AGENTS With the passage of Insurance Act, 2006 (Act 724), the Commission changed its system of registering agents. A new numbering system has been developed and currently there are a little over 3,300 licensed individual (tied) agents. As a way of increasing earnings a number of insurance companies have teamed up with some banks and micro finance institutions (MFIs) to introduce insurance products to their clients for a fee (commission). These are licensed as corporate agents. Presently about 10 banks and 3 MFIs are involved in the distribution of insurance products. NIC 26

27 Insurance Market Financial and Ratio Analysis Introduction Whereas the Life sector grew by 44% from to, the nonlife sector grew by just 32% in terms of gross premium income. Generally, by all indicators, the life sector appears to be growing much faster than the nonlife sector. The various growth and performance indicators have been summarized in the tables below. Table 13: Key Growth Indicators (LIFE) / Indicator (GH m) (GH m) Growth Rate Premium Income % Total Assets % Total Investments % Actuarial Liabilities % Total Capitalisation % Table 14: Key Growth Indicators (NONLIFE) / Indicator (GH m) (GH m) Growth Rate Premium Income % Premium Debtors % Total Assets % Total Investments % Technical Provisions % Total Capitalisation % The industry average key performance indicators (ratios) are presented in the tables below for nonlife and life respectively 27 NIC

28 Table 15: Industry Average Ratios (Nonlife) Ratio Change in Gross Written Premium (%) Change in Net Written Premium (%) Gross Insurance Risk Ratio Net Insurance Risk Ratio Change in Capital and Surplus (%) Premium Debtors as a % of Equity Premium Debtors as % of Total Assets Premium Debtors as a % of Gross Premiums Claims Reserve Ratio (%) Retention Ratio (%) Investments Yield (%) Return on Assets (%) Return on Equity (%) Claims Ratio (%) Expense Ratio (%) Combined Ratio (%) Technical Reserves Cover (%) Investments to Total Assets Ratio (%) x 1.2x x 1.4x Due to the adoption of Risk Based Supervision by the NIC, there have been significant changes in the set of ratios used in the reports. Some ratios have been taken out, a few new ones have been added and the definitions of a few others have also been revised. Kindly see the detailed analysis for more information. Table 16: Industry Average Ratios (Life) Ratio Change in policyholder inflows (%) Policyholder Coverage Investments to Total Asset (%) Policyholder Benefit Cover (%) Retention Ratio (%) Investment Yield (%) Return on Equity (%) Return on Assets (%) Expense Ratio (%) Change in Capital and Surplus (%) x x NIC 28

29 Table 17: Gross Premium Growth and Penetration Year Gross Premium Income (GH ) Growth Rate (%) Insurance Penetration ,207, % ,457, % ,494, % ,072, % 458,694, % 628,528, % 29 NIC

30 Performance Indicators (Life Companies) CHANGE IN POLICYHOLDER INFLOWS: This ratio provides an indicator of the growth or contraction of the insurer s total (both risk and investment) inflows from policyholders. Even though, it is very rare, Colina and Vanguard actually recorded contractions in their total policyholder inflows in. The industry growth rate dipped from 40% in to 36% in. The total life industry inflows however grew by about 44% in over. This is compared to 32% growth in total nonlife industry growth. Table 18: Change in Policyholder Inflows Company Industry Average Capital Express Assurance (Ghana) Limited Colina Life Company Limited Donewell Life Insurance Company Limited Enterprise Life Assurance Company Limited Express Life Insurance Company Limited Ghana Life Insurance Company Limited Ghana Union Assurance Life Company Limited GLICO Life Insurance company Limited IGI Life Assurance (Ghana) Limited Metropolitan Life Insurance Company Limited Phoenix Life Assurance Company Limited Provident Life Assurance Company Limited Quality Life Assurance Company Limited SIC Life Company Limited StarLife Assurance Company Limited Unique Life Assurance Company Limited UT Life Company Limited Vanguard Life Assurance Company Limited Percentage (%) NIC 30

31 POLICYHOLDER COVERAGE This ratio calculates how the equity of the company compares to the actuarial liabilities. It is an indicator of how much capital the company has to support the technical provisions. Generally, when the actuarial provisions are more than 300% of the company s equity, it is considered risky since the ability to absorb unexpected shocks is limited. This is however subject to the detailed capital adequacy requirements. Table 19: Policyholder Coverage Company Industry Average Capital Express Assurance (Ghana) Limited Colina Life Company Limited Donewell Life Insurance Company Limited Enterprise Life Assurance Company Limited Express Life Insurance Company Limited Ghana Life Insurance Company Limited Ghana Union Assurance Life Company Limited GLICO Life Insurance company Limited IGI Life Assurance (Ghana) Limited Metropolitan Life Insurance Company Limited Phoenix Life Assurance Company Limited Provident Life Assurance Company Limited Quality Life Assurance Company Limited SIC Life Company Limited StarLife Assurance Company Limited Unique Life Assurance Company Limited UT Life Company Limited Vanguard Life Assurance Company Limited Percentage (%) , NIC

32 PROPORTION OF INVESTMENT ASSETS This is an asset quality ratio and is calculated as total investments divided by total assets. It seeks to establish the percentage of the company s assets that are in the form of investments as opposed to operational and depreciable assets. The higher the ratio, the better the quality of the company s asset base. Table 20: Proportion of Investment Assets Company Industry Average Capital Express Assurance (Ghana) Limited Colina Life Company Limited Donewell Life Insurance Company Limited Enterprise Life Assurance Company Limited Express Life Insurance Company Limited Ghana Life Insurance Company Limited Ghana Union Assurance Life Company Limited GLICO Life Insurance company Limited IGI Life Assurance (Ghana) Limited Metropolitan Life Insurance Company Limited Phoenix Life Assurance Company Limited Provident Life Assurance Company Limited Quality Life Assurance Company Limited SIC Life Company Limited StarLife Assurance Company Limited Unique Life Assurance Company Limited UT Life Company Limited Vanguard Life Assurance Company Limited Percentage (%) Generally, life insurers have better quality asset ratio than the nonlife companies because life insurers are not affected by the premium debtors problem. In view of this fact, the ratios of Capital Express, Donewell Life, Express Life, Ghana Life and UT Life are too low. NIC 32

33 POLICYHOLDER BENEFIT COVER This is an investment adequacy ratio and is calculated by dividing the total investments by the actuarial liabilities. It seeks to assess the adequacy of the company s investments to cover the policyholder liabilities. The investment assets should, as a minimum, cover policyholder benefits. A ratio of less than 100 means that the company does not have enough investments to cover the policyholder liabilities. Table 21: Policyholder Benefit Cover Company Industry Average Capital Express Assurance (Ghana) Limited Colina Life Company Limited Donewell Life Insurance Company Limited Enterprise Life Assurance Company Limited Express Life Insurance Company Limited Ghana Life Insurance Company Limited Ghana Union Assurance Life Company Limited GLICO Life Insurance company Limited IGI Life Assurance (Ghana) Limited Metropolitan Life Insurance Company Limited Phoenix Life Assurance Company Limited Provident Life Assurance Company Limited Quality Life Assurance Company Limited SIC Life Company Limited StarLife Assurance Company Limited Unique Life Assurance Company Limited UT Life Company Limited Vanguard Life Assurance Company Limited Percentage (%) NIC

34 RETENTION RATIO This ratio calculates the portion of the premiums that are not ceded to reinsurers. Retention is quite high among life insurers in Ghana since large exposure to a single life is very rare. Facultative covers are however used where there are such large exposures. Table 22: Retention Ratio Company Industry Average Capital Express Assurance (Ghana) Limited Colina Life Company Limited Donewell Life Insurance Company Limited Enterprise Life Assurance Company Limited Express Life Insurance Company Limited Ghana Life Insurance Company Limited Ghana Union Assurance Life Company Limited GLICO Life Insurance company Limited IGI Life Assurance (Ghana) Limited Metropolitan Life Insurance Company Limited Phoenix Life Assurance Company Limited Provident Life Assurance Company Limited Quality Life Assurance Company Limited SIC Life Company Limited StarLife Assurance Company Limited Unique Life Assurance Company Limited UT Life Company Limited Vanguard Life Assurance Company Limited Percentage (%) NIC 34

35 INVESTMENT YIELD This ratio calculates the return on the company s investments. It is calculated by dividing the investment income by the total investments. It is a good indicator of the quality of the company s investment portfolio. All things being equal, a good investment will yield a reasonably good return. The industry average dipped slightly from 11% in to 9% in. Capital Express, Glico Life and SIC Life recorded the lowest returns. Table 23: Investment Yield Company Industry Average Capital Express Assurance (Ghana) Limited Colina Life Company Limited Donewell Life Insurance Company Limited Enterprise Life Assurance Company Limited Express Life Insurance Company Limited Ghana Life Insurance Company Limited Ghana Union Assurance Life Company Limited GLICO Life Insurance company Limited IGI Life Assurance (Ghana) Limited Metropolitan Life Insurance Company Limited Phoenix Life Assurance Company Limited Provident Life Assurance Company Limited Quality Life Assurance Company Limited SIC Life Company Limited StarLife Assurance Company Limited Unique Life Assurance Company Limited UT Life Company Limited Vanguard Life Assurance Company Limited Percentage (%) NIC

36 RETURN ON EQUITY RATIO This ratio calculates the return on shareholders funds over a period, usually, one year. The companies showing negative figures actually made losses. The ratio for Express Life is due to the rather very small capital base. Table 22: Retention Ratio Company Industry Average Capital Express Assurance (Ghana) Limited Colina Life Company Limited Donewell Life Insurance Company Limited Enterprise Life Assurance Company Limited Express Life Insurance Company Limited Ghana Life Insurance Company Limited Ghana Union Assurance Life Company Limited GLICO Life Insurance company Limited IGI Life Assurance (Ghana) Limited Metropolitan Life Insurance Company Limited Phoenix Life Assurance Company Limited Provident Life Assurance Company Limited Quality Life Assurance Company Limited SIC Life Company Limited StarLife Assurance Company Limited Unique Life Assurance Company Limited UT Life Company Limited Vanguard Life Assurance Company Limited Percentage (%) , NIC 36

37 EXPENSE RATIO This ratio calculates actual management expenses incurred as a percentage of total inflows received from policyholders. This is another of the key indicators of profitability and efficiency. A high ratio indicates inefficiency on the part of the insurance company. It actually means that much of the premium is going into expenses and not policyholder benefit reserves. Table 25: Expense Ratio Company Industry Average Capital Express Assurance (Ghana) Limited Colina Life Company Limited Donewell Life Insurance Company Limited Enterprise Life Assurance Company Limited Express Life Insurance Company Limited Ghana Life Insurance Company Limited Ghana Union Assurance Life Company Limited GLICO Life Insurance company Limited IGI Life Assurance (Ghana) Limited Metropolitan Life Insurance Company Limited Phoenix Life Assurance Company Limited Provident Life Assurance Company Limited Quality Life Assurance Company Limited SIC Life Company Limited StarLife Assurance Company Limited Unique Life Assurance Company Limited UT Life Company Limited Vanguard Life Assurance Company Limited Percentage (%) NIC

38 CHANGE IN CAPITAL AND SURPLUS This ratio measures the growth or decline in the equity of the insurer over the previous year. It is the general measure of improvement or deterioration of an insurer s financial position. Some of the factors that could affect this ratio are after tax profits or losses, changes in unrealised gains or losses on assets, or changes in the actuarial liabilities valuation policies and assumptions. Significant declines in Capital and Surplus affect solvency and often trigger fresh capital injection. Table 26: Change in Capital and Surplus Company Industry Average Capital Express Assurance (Ghana) Limited Colina Life Company Limited Donewell Life Insurance Company Limited Enterprise Life Assurance Company Limited Express Life Insurance Company Limited Ghana Life Insurance Company Limited Ghana Union Assurance Life Company Limited GLICO Life Insurance company Limited IGI Life Assurance (Ghana) Limited Metropolitan Life Insurance Company Limited Phoenix Life Assurance Company Limited Provident Life Assurance Company Limited Quality Life Assurance Company Limited SIC Life Company Limited StarLife Assurance Company Limited Unique Life Assurance Company Limited UT Life Company Limited Vanguard Life Assurance Company Limited Percentage (%) , , NIC 38

39 RETURN ON ASSETS This is calculated as, profits after tax divided by total assets. It seeks to measure the efficiency with which management utilize the assets of the company to generate returns for the various stakeholders. The industry average improved slightly from 2% in to 3% in. Table 27: Return on Assets Company Industry Average Capital Express Assurance (Ghana) Limited Colina Life Company Limited Donewell Life Insurance Company Limited Enterprise Life Assurance Company Limited Express Life Insurance Company Limited Ghana Life Insurance Company Limited Ghana Union Assurance Life Company Limited GLICO Life Insurance company Limited IGI Life Assurance (Ghana) Limited Metropolitan Life Insurance Company Limited Phoenix Life Assurance Company Limited Provident Life Assurance Company Limited Quality Life Assurance Company Limited SIC Life Company Limited StarLife Assurance Company Limited Unique Life Assurance Company Limited UT Life Company Limited Vanguard Life Assurance Company Limited Percentage (%) NIC

40 LIFE INSURANCE INDUSTRY AGGREGATED BALANCE SHEET Life Insuran Table 28: Life Insurance Industry Aggregated Balance Sheet as at 31 December, GH GH Note Stated Capital Capital Surplus Income Surplus Contingency Reserve Shareholders Funds 83,217, ,096, (923,290.00) 5,889, ,281, ,255, ,794, (4,819,982.00) 4,332, ,563, Represented By: Fixed Assets Investment Properties 1 33,859, ,623, ,961, ,883, Long Term Investments 2 115,319, ,802, ,042, ,887, Current Assets Policy loans 28,291, ,732, Other Debtors/Loans 32,593, ,394, Amount due from reinsurers 472, , Taxation 283, , Short term investments Cash funds/resources 3 200,175, ,330, ,582, ,784, ,147, ,945, Current Liabilities Provision for unearned Premiums Provision for claims 363, , Amount due to reinsurers 1,013, , Bank Overdraft 1,589, ,418, Creditors 22,624, ,593, Taxation 168, , Proposed Dividend 116, , ,877, ,799, Net Current Asset/Liabilities 261,269, ,145, Actuarial Liabilities 345,831, ,010, Other Long Term Liabilities 15,960, ,460, ,791, ,470, Net Assets/Liabilities 104,281, ,563, NIC 40

41 Table 29: Notes to the Life Industry Aggregate Balance Sheet NOTE 1 FIXED ASSETS GH GH Land & Buildings Furniture, Fittings & Equipment Motor Vehicles Work in Progress Intangibles Computer Equipment 12,714,421 3,228,736 3,558,173 11,302, , ,149, ,859, ,894, ,032, ,599, ,912, , ,016, ,961, NOTE 2 LONG TERM INVESTMENTS Quoted Shares Unquoted shares Government Bonds Others Corporate Bonds 47,943, ,040, ,122, ,987, ,225, ,319, ,136, ,626, ,203, ,869, , ,042, NOTE 3 SHORT TERM INVETSMENTS Treasury bills Fixed Deposits Call accounts Unit trusts Bonds 35,922, ,614, , ,625, ,175, ,460, ,656, ,711, , ,582, NIC

42 Table 30: Make up of Assets GH % GH % Fixed Assets 33,859, ,961, Investment Properties 55,623, ,883, Long Term Investments 115,319, ,042, Investments in Subsidiaries Policy Loans 28,291, ,732, Other Debtors 32,593, ,394, Amount Due from reinsurers 472, , Taxation 283, , Short term investments 200,175, ,582, Cash funds/resources 25,330, ,784, ,949, ,833, NIC 42

43 Performance Indicators (NonLife Companies) CHANGES IN GROSS WRITTEN PREMIUMS This ratio measures growth or contraction in the company s gross premium over the previous year. The industry average for was 29%. Whereas Donewell, Ghana Re, Ghana Union, and Unique all grew at rates well below the industry average, companies like Allianz and Colina recorded much higher rates of growth mainly because they are relatively new. Table 31: Changes in Gross written Premium Company Industry Average Activa International Insurance Company Limited Allianz Insurance Company Of Ghana Limited Colina Ghana Insurance Company Limited Donewell Insurance Company Limited Enterprise Insurance Company Limited Equity Assurance Limited Ghana Reinsurance Company Limited Ghana Union Assurance Company Limited Glico General Insurance Company Limited IGI Insurance Company (Ghana) Limited Intercontinental Wapic Insurance Ghana Limited International Energy Insurance Company Limited Mainstream Reinsurance Company Limited Metropolitan Insurance Company Limited NEM Insurance (Ghana) Limited NSIA Ghana Insurance Company Limited Phoenix Insurance Company Limited Prime Insurance Company Limited Provident Insurance Company Limited Quality Insurance Company Limited Regency Alliance Insurance Limited SIC Insurance Company Limited Star Assurance Company Limited Unique Insurance Company Limited Vanguard Assurance Company Limited Percentage (%) ,860 1, NIC

44 CHANGES IN NET WRITTEN PREMIUMS This ratio measures growth or contraction in the company s net premium over the previous year. A high growth/contraction rate that does not appear to mirror the gross growth rate may indicate significant changes in the company s reinsurance cover. Table 32: Changes in Net written Premium Company Industry Average Activa International Insurance Company Limited Allianz Insurance Company Of Ghana Limited Colina Ghana Insurance Company Limited Donewell Insurance Company Limited Enterprise Insurance Company Limited Equity Assurance Limited Ghana Reinsurance Company Limited Ghana Union Assurance Company Limited Glico General Insurance Company Limited IGI Insurance Company (Ghana) Limited Intercontinental Wapic Insurance Ghana Limited International Energy Insurance Company Limited Mainstream Reinsurance Company Limited Metropolitan Insurance Company Limited NEM Insurance (Ghana) Limited NSIA Ghana Insurance Company Limited Phoenix Insurance Company Limited Prime Insurance Company Limited Provident Insurance Company Limited Quality Insurance Company Limited Regency Alliance Insurance Limited SIC Insurance Company Limited Star Assurance Company Limited Unique Insurance Company Limited Vanguard Assurance Company Limited Percentage (%) ,159 1, NIC 44

45 NET INSURANCE RISK RATIO This ratio is calculated by dividing the Net Written Premium by the Equity of the company. It measures the ability of the insurer s capital and surplus, relative to its business, to absorb shock. The higher the ratio, the greater the potential risk that the insurer cannot absorb shock losses. Judging the industry average, the ratios of Equity, Intercontinental Wapic, Quality and Regency Alliance are too high. International Energy needs an immediate capital injection. Table 33: Changes In Gross Written Premium Company Industry Average Activa International Insurance Company Limited Allianz Insurance Company Of Ghana Limited Colina Ghana Insurance Company Limited Donewell Insurance Company Limited Enterprise Insurance Company Limited Equity Assurance Limited Ghana Reinsurance Company Limited Ghana Union Assurance Company Limited Glico General Insurance Company Limited IGI Insurance Company (Ghana) Limited Intercontinental Wapic Insurance Ghana Limited International Energy Insurance Company Limited Mainstream Reinsurance Company Limited Metropolitan Insurance Company Limited NEM Insurance (Ghana) Limited NSIA Ghana Insurance Company Limited Phoenix Insurance Company Limited Prime Insurance Company Limited Provident Insurance Company Limited Quality Insurance Company Limited Regency Alliance Insurance Limited SIC Insurance Company Limited Star Assurance Company Limited Unique Insurance Company Limited Vanguard Assurance Company Limited Percentage (%) , NIC

46 GROSS INSURANCE RISK RATIO This ratio is similar to the Net Risk Ratio except that the Gross Written Premium instead of the Net Written Premiums are used. Again, the ratios of Intercontinental Wapic, Quality and Vanguard stand out. The ratios of Metropolitan and Star appear high but the risk seems to be managed through reinsurance as evidenced by their net risk ratios. Table 34: Gross Insurance Risk Ratio Company Industry Average Activa International Insurance Company Limited Allianz Insurance Company Of Ghana Limited Colina Ghana Insurance Company Limited Donewell Insurance Company Limited Enterprise Insurance Company Limited Equity Assurance Limited Ghana Reinsurance Company Limited Ghana Union Assurance Company Limited Glico General Insurance Company Limited IGI Insurance Company (Ghana) Limited Intercontinental Wapic Insurance Ghana Limited International Energy Insurance Company Limited Mainstream Reinsurance Company Limited Metropolitan Insurance Company Limited NEM Insurance (Ghana) Limited NSIA Ghana Insurance Company Limited Phoenix Insurance Company Limited Prime Insurance Company Limited Provident Insurance Company Limited Quality Insurance Company Limited Regency Alliance Insurance Limited SIC Insurance Company Limited Star Assurance Company Limited Unique Insurance Company Limited Vanguard Assurance Company Limited Percentage (%) , NIC 46

47 CHANGE IN CAPITAL AND SURPLUS This ratio measures the growth or decline in the equity of the insurer over the previous year. It is the general measure of improvement or deterioration of an insurer s financial position. Some of the factors that could affect this ratio are after tax profits or losses, changes in unrealised gains or losses on assets, or changes in the Technical Provision valuation policies. The very high figure for Activa is due to additional capital introduced in. Allianz, International Energy and Provident made after tax losses. Enterprise recorded significant changes in unrealised gains while Regency Alliance s figure is due to the writeoff of some intangible assets. Table 33: Changes In Gross Written Premium Company Industry Average Activa International Insurance Company Limited Allianz Insurance Company Of Ghana Limited Colina Ghana Insurance Company Limited Donewell Insurance Company Limited Enterprise Insurance Company Limited Equity Assurance Limited Ghana Reinsurance Company Limited Ghana Union Assurance Company Limited Glico General Insurance Company Limited IGI Insurance Company (Ghana) Limited Intercontinental Wapic Insurance Ghana Limited International Energy Insurance Company Limited Mainstream Reinsurance Company Limited Metropolitan Insurance Company Limited NEM Insurance (Ghana) Limited NSIA Ghana Insurance Company Limited Phoenix Insurance Company Limited Prime Insurance Company Limited Provident Insurance Company Limited Quality Insurance Company Limited Regency Alliance Insurance Limited SIC Insurance Company Limited Star Assurance Company Limited Unique Insurance Company Limited Vanguard Assurance Company Limited Percentage (%) (15) NIC

48 PREMIUM RECEIVABLE AS A PERCENTAGE OF EQUITY This ratio seeks to calculate Premium Debtors as a percentage of the company s Equity. It measures the degree to which solvency depends on an asset that frequently cannot be converted to cash outstanding premiums. In other words, it provides an answer to the question; if all the Premium Debtors on the Balance Sheet of a nonlife insurer is written off, what will be the impact on the company s networth? Table 36: Premium Recievable as a Percentage of Equity Company Industry Average Activa International Insurance Company Limited Allianz Insurance Company Of Ghana Limited Colina Ghana Insurance Company Limited Donewell Insurance Company Limited Enterprise Insurance Company Limited Equity Assurance Limited Ghana Reinsurance Company Limited Ghana Union Assurance Company Limited Glico General Insurance Company Limited IGI Insurance Company (Ghana) Limited Intercontinental Wapic Insurance Ghana Limited International Energy Insurance Company Limited Mainstream Reinsurance Company Limited Metropolitan Insurance Company Limited NEM Insurance (Ghana) Limited NSIA Ghana Insurance Company Limited Phoenix Insurance Company Limited Prime Insurance Company Limited Provident Insurance Company Limited Quality Insurance Company Limited Regency Alliance Insurance Limited SIC Insurance Company Limited Star Assurance Company Limited Unique Insurance Company Limited Vanguard Assurance Company Limited Percentage (%) The industry average of 72%, which is a slight improvement over the 75% in, means that if the Premium Debtors are written off, an average nonlife insurer will only have 28% of its equity left. Allianz and Enterprise have very good ratios whiles Equity, Intercontinental Wapic, Phoenix, Quality, Regency Alliance, Unique and Vanguard all have more Premium Debtors than Equity. International Energy is certainly out of range. NIC 48

49 PREMIUM RECEIVABLE AS A PERCENTAGE OF TOTAL ASSETS This ratio calculates Premium Debtors as a percentage of total assets. It is an indication of the quality of the assets on the company s Balance Sheet. The higher the ratio, the more risky the company since premium debtors are very bad compared to investments when it comes to conversion to cash. Activa, Allianz, Enterprise, Ghana Re and Ghana Union have very good ratios. The ratios of International Energy, Mainstream, Phoenix, Quality, Regency Alliance and Unique are too high and needs to be worked on. Table 37: Premium Recievable as a Percentage of Total Assets Company Industry Average Activa International Insurance Company Limited Allianz Insurance Company Of Ghana Limited Colina Ghana Insurance Company Limited Donewell Insurance Company Limited Enterprise Insurance Company Limited Equity Assurance Limited Ghana Reinsurance Company Limited Ghana Union Assurance Company Limited Glico General Insurance Company Limited IGI Insurance Company (Ghana) Limited Intercontinental Wapic Insurance Ghana Limited International Energy Insurance Company Limited Mainstream Reinsurance Company Limited Metropolitan Insurance Company Limited NEM Insurance (Ghana) Limited NSIA Ghana Insurance Company Limited Phoenix Insurance Company Limited Prime Insurance Company Limited Provident Insurance Company Limited Quality Insurance Company Limited Regency Alliance Insurance Limited SIC Insurance Company Limited Star Assurance Company Limited Unique Insurance Company Limited Vanguard Assurance Company Limited Percentage (%) NIC

50 PREMIUM RECEIVABLE AS A PERCENTAGE OF GROSS PREMIUMS This ratio calculates the portion of the company s premium income that remains uncollected as at the end of the year. It is a good indication of the quality of the profits declared by the company. This is because if most of a company s premium income for a year have not been collected from the policyholders, then any profits declared will only be paper profits as there will be no cash to back it. Even though the industry average improved slightly from 44% in to 39% in, a good number of companies still had very significant portions of their premium income uncollected as at end of. Table 38: Premium Recievable as a Percentage of Gross Premiums Company Industry Average Activa International Insurance Company Limited Allianz Insurance Company Of Ghana Limited Colina Ghana Insurance Company Limited Donewell Insurance Company Limited Enterprise Insurance Company Limited Equity Assurance Limited Ghana Reinsurance Company Limited Ghana Union Assurance Company Limited Glico General Insurance Company Limited IGI Insurance Company (Ghana) Limited Intercontinental Wapic Insurance Ghana Limited International Energy Insurance Company Limited Mainstream Reinsurance Company Limited Metropolitan Insurance Company Limited NEM Insurance (Ghana) Limited NSIA Ghana Insurance Company Limited Phoenix Insurance Company Limited Prime Insurance Company Limited Provident Insurance Company Limited Quality Insurance Company Limited Regency Alliance Insurance Limited SIC Insurance Company Limited Star Assurance Company Limited Unique Insurance Company Limited Vanguard Assurance Company Limited Percentage (%) NIC 50

51 CLAIMS RESERVE RATIO This ratio is calculated as the Provision for Outstanding Claims divided by the Net Earned Premiums. It compares the relationship of Provisions for Outstanding Claims to net earned premiums, to determine if the company is adequately reserving for claims in process. It is therefore an indication of the adequacy of the Outstanding Claims Provision. An internationally acceptable range for this ratio is between 30% and 50%. Going strictly by that will mean that most of the companies are not making adequate provision for Claims. Indeed about eight companies actually show single digit figures which is not acceptable. Table 39: Claims Reserve Ratio Company Industry Average Activa International Insurance Company Limited Allianz Insurance Company Of Ghana Limited Colina Ghana Insurance Company Limited Donewell Insurance Company Limited Enterprise Insurance Company Limited Equity Assurance Limited Ghana Reinsurance Company Limited Ghana Union Assurance Company Limited Glico General Insurance Company Limited IGI Insurance Company (Ghana) Limited Intercontinental Wapic Insurance Ghana Limited International Energy Insurance Company Limited Mainstream Reinsurance Company Limited Metropolitan Insurance Company Limited NEM Insurance (Ghana) Limited NSIA Ghana Insurance Company Limited Phoenix Insurance Company Limited Prime Insurance Company Limited Provident Insurance Company Limited Quality Insurance Company Limited Regency Alliance Insurance Limited SIC Insurance Company Limited Star Assurance Company Limited Unique Insurance Company Limited Vanguard Assurance Company Limited Percentage (%) NIC

52 RETENTION RATIO This is calculated as the Net Written Premium divided by the Gross Written Premium. It represents the portion of the risk that is not passed on to reinsurers. Even though high retentions are usually more risky, the amount retained will vary significantly according to class of business. For example short tail motor business may have a higher retention than an industrial fire business.the industry average retention ratio dipped slightly from 71% in to 69% in. Whereas the ratio of Allianz is too low, Donewell, Equity, Ghana Re, Intercontinental Wapic, NSIAH and Regency Alliance appear to be retaining too much. Table 40: Retention Ratio Company Industry Average Activa International Insurance Company Limited Allianz Insurance Company Of Ghana Limited Colina Ghana Insurance Company Limited Donewell Insurance Company Limited Enterprise Insurance Company Limited Equity Assurance Limited Ghana Reinsurance Company Limited Ghana Union Assurance Company Limited Glico General Insurance Company Limited IGI Insurance Company (Ghana) Limited Intercontinental Wapic Insurance Ghana Limited International Energy Insurance Company Limited Mainstream Reinsurance Company Limited Metropolitan Insurance Company Limited NEM Insurance (Ghana) Limited NSIA Ghana Insurance Company Limited Phoenix Insurance Company Limited Prime Insurance Company Limited Provident Insurance Company Limited Quality Insurance Company Limited Regency Alliance Insurance Limited SIC Insurance Company Limited Star Assurance Company Limited Unique Insurance Company Limited Vanguard Assurance Company Limited Percentage (%) NIC 52

53 INVESTMENT YIELD This ratio calculates the return on the company s investments. It is calculated by dividing the investment income by the total investments. It is a good indicator of the quality of the company s investment portfolio. All things being equal, a good investment will yield a reasonably good return. The industry average dipped slightly from 10% in to 9% in. The ratios of Quality and Mainstream appear out of range of the industry yield. The figure for Enterprise is mainly due to unrealised Fair value gains. Activa, Unique and SIC recorded the lowest returns. Table 41: Investment Yield Company Industry Average Activa International Insurance Company Limited Allianz Insurance Company Of Ghana Limited Colina Ghana Insurance Company Limited Donewell Insurance Company Limited Enterprise Insurance Company Limited Equity Assurance Limited Ghana Reinsurance Company Limited Ghana Union Assurance Company Limited Glico General Insurance Company Limited IGI Insurance Company (Ghana) Limited Intercontinental Wapic Insurance Ghana Limited International Energy Insurance Company Limited Mainstream Reinsurance Company Limited Metropolitan Insurance Company Limited NEM Insurance (Ghana) Limited NSIA Ghana Insurance Company Limited Phoenix Insurance Company Limited Prime Insurance Company Limited Provident Insurance Company Limited Quality Insurance Company Limited Regency Alliance Insurance Limited SIC Insurance Company Limited Star Assurance Company Limited Unique Insurance Company Limited Vanguard Assurance Company Limited Percentage (%) NIC

54 RETURN ON ASSET RATIO This is calculated as after tax profits divided by total assets. It seeks to measure the efficiency with which management utilise the assets of the company to generate returns for the various stakeholders. The industry average improved slightly from 2% in to 4% in. Table 42: Return on Assets Ratio Company Industry Average Activa International Insurance Company Limited Allianz Insurance Company Of Ghana Limited Colina Ghana Insurance Company Limited Donewell Insurance Company Limited Enterprise Insurance Company Limited Equity Assurance Limited Ghana Reinsurance Company Limited Ghana Union Assurance Company Limited Glico General Insurance Company Limited IGI Insurance Company (Ghana) Limited Intercontinental Wapic Insurance Ghana Limited International Energy Insurance Company Limited Mainstream Reinsurance Company Limited Metropolitan Insurance Company Limited NEM Insurance (Ghana) Limited NSIA Ghana Insurance Company Limited Phoenix Insurance Company Limited Prime Insurance Company Limited Provident Insurance Company Limited Quality Insurance Company Limited Regency Alliance Insurance Limited SIC Insurance Company Limited Star Assurance Company Limited Unique Insurance Company Limited Vanguard Assurance Company Limited Percentage (%) NIC 54

55 CLAIMS RATIO This ratio is calculated as the net claims incurred divided by the Net Earned Premiums. It is an indication of how well an insurance company pays claims and to some extent, of fair customer treatment since the ratio is an indication of how much policyholders get back in return for each cedi of premium paid to insurance companies. The industry average ratio increased from 28% in to 38% in due to the floods in Accra. Generally, however, the ratio is below international standards which is between 60% to 80%. General insurers will have to work hard to improve on this in order to win the confidence of the average Ghanaian in insurance. The ratios of Equity, Intercontinental Wapic, NEM and Quality are unacceptably low. Table 43: Claims Ratio Company Industry Average Activa International Insurance Company Limited Allianz Insurance Company Of Ghana Limited Colina Ghana Insurance Company Limited Donewell Insurance Company Limited Enterprise Insurance Company Limited Equity Assurance Limited Ghana Reinsurance Company Limited Ghana Union Assurance Company Limited Glico General Insurance Company Limited IGI Insurance Company (Ghana) Limited Intercontinental Wapic Insurance Ghana Limited International Energy Insurance Company Limited Mainstream Reinsurance Company Limited Metropolitan Insurance Company Limited NEM Insurance (Ghana) Limited NSIA Ghana Insurance Company Limited Phoenix Insurance Company Limited Prime Insurance Company Limited Provident Insurance Company Limited Quality Insurance Company Limited Regency Alliance Insurance Limited SIC Insurance Company Limited Star Assurance Company Limited Unique Insurance Company Limited Vanguard Assurance Company Limited Percentage (%) NIC

56 EXPENSE RATIO This is calculated as Management Expenses as a percentage of Net Earned Premium. This is another of the key indicators of profitability. A high ratio indicates inefficiency on the part of the insurance company. It actually means that much of the premium is going into expenses and not claims. The ratios of Activa, Regency Alliance and Star are too high. The ratios of Metropolitan and Allianz are due to very low retentions. Unique, International Energy and Colina incurred expenses well in excess of their net earned premiums. Table 44: Expense Ratio Company Industry Average Activa International Insurance Company Limited Allianz Insurance Company Of Ghana Limited Colina Ghana Insurance Company Limited Donewell Insurance Company Limited Enterprise Insurance Company Limited Equity Assurance Limited Ghana Reinsurance Company Limited Ghana Union Assurance Company Limited Glico General Insurance Company Limited IGI Insurance Company (Ghana) Limited Intercontinental Wapic Insurance Ghana Limited International Energy Insurance Company Limited Mainstream Reinsurance Company Limited Metropolitan Insurance Company Limited NEM Insurance (Ghana) Limited NSIA Ghana Insurance Company Limited Phoenix Insurance Company Limited Prime Insurance Company Limited Provident Insurance Company Limited Quality Insurance Company Limited Regency Alliance Insurance Limited SIC Insurance Company Limited Star Assurance Company Limited Unique Insurance Company Limited Vanguard Assurance Company Limited Percentage (%) NIC 56

57 COMBINED RATIO The combined ratio is an addition of the claims ratio and the expense ratio. It is the single best measure of an insurer s operational profitability. The ratio does not measure total profitability as investment earnings are excluded. A ratio of less than 100% indicates that the company is operationally profitable. A ratio of more than 100% may not necessarily indicate that the company is unprofitable: it may be that investment returns are high. The ratios indicate that most insurers were not operationally efficient in and this is mainly due to high expense ratios. Table 45: Combined Ratio Company Industry Average Activa International Insurance Company Limited Allianz Insurance Company Of Ghana Limited Colina Ghana Insurance Company Limited Donewell Insurance Company Limited Enterprise Insurance Company Limited Equity Assurance Limited Ghana Reinsurance Company Limited Ghana Union Assurance Company Limited Glico General Insurance Company Limited IGI Insurance Company (Ghana) Limited Intercontinental Wapic Insurance Ghana Limited International Energy Insurance Company Limited Mainstream Reinsurance Company Limited Metropolitan Insurance Company Limited NEM Insurance (Ghana) Limited NSIA Ghana Insurance Company Limited Phoenix Insurance Company Limited Prime Insurance Company Limited Provident Insurance Company Limited Quality Insurance Company Limited Regency Alliance Insurance Limited SIC Insurance Company Limited Star Assurance Company Limited Unique Insurance Company Limited Vanguard Assurance Company Limited Percentage (%) NIC

58 TECHNICAL RESERVES COVER This ratio is an indicator of whether sufficient liquid assets are being held to cover the payment of technical reserves, as claims should be able to be paid as and when they fall due. Ratios above one hundred per cent mean that the companies do not have enough liquid investments backing their technical provisions. Table 46: Technical Reserves Cover Company Industry Average Activa International Insurance Company Limited Allianz Insurance Company Of Ghana Limited Colina Ghana Insurance Company Limited Donewell Insurance Company Limited Enterprise Insurance Company Limited Equity Assurance Limited Ghana Reinsurance Company Limited Ghana Union Assurance Company Limited Glico General Insurance Company Limited IGI Insurance Company (Ghana) Limited Intercontinental Wapic Insurance Ghana Limited International Energy Insurance Company Limited Mainstream Reinsurance Company Limited Metropolitan Insurance Company Limited NEM Insurance (Ghana) Limited NSIA Ghana Insurance Company Limited Phoenix Insurance Company Limited Prime Insurance Company Limited Provident Insurance Company Limited Quality Insurance Company Limited Regency Alliance Insurance Limited SIC Insurance Company Limited Star Assurance Company Limited Unique Insurance Company Limited Vanguard Assurance Company Limited Percentage (%) NIC 58

59 PROPORTION OF INVESTMENT ASSETS This ratio is calculated as total investments divided by total asset. It seeks to measure investments as a percentage of total assets. It is an indicator of the quality of the assets on the company s Balance Sheet since investments are much better than Fixed Assets, Premium Debtors and other related party balances which may not be easily converted into cash to pay off the company s liabilities. The ratios of International Energy, Mainstream, Regency Alliance, Unique and Quality are too low. Table 47: Proportion of Investment Assets Company Industry Average Activa International Insurance Company Limited Allianz Insurance Company Of Ghana Limited Colina Ghana Insurance Company Limited Donewell Insurance Company Limited Enterprise Insurance Company Limited Equity Assurance Limited Ghana Reinsurance Company Limited Ghana Union Assurance Company Limited Glico General Insurance Company Limited IGI Insurance Company (Ghana) Limited Intercontinental Wapic Insurance Ghana Limited International Energy Insurance Company Limited Mainstream Reinsurance Company Limited Metropolitan Insurance Company Limited NEM Insurance (Ghana) Limited NSIA Ghana Insurance Company Limited Phoenix Insurance Company Limited Prime Insurance Company Limited Provident Insurance Company Limited Quality Insurance Company Limited Regency Alliance Insurance Limited SIC Insurance Company Limited Star Assurance Company Limited Unique Insurance Company Limited Vanguard Assurance Company Limited Percentage (%) NIC

60 RETURN ON EQUITY This ratio calculates the return on shareholders funds over a period, usually, one year. Whereas excessive returns may indicate inadequate claims payments, losses actually erode the company s retained earnings and hence its capital base and threaten the company s solvency. Table 48: Combined Ratio Company Industry Average Activa International Insurance Company Limited Allianz Insurance Company Of Ghana Limited Colina Ghana Insurance Company Limited Donewell Insurance Company Limited Enterprise Insurance Company Limited Equity Assurance Limited Ghana Reinsurance Company Limited Ghana Union Assurance Company Limited Glico General Insurance Company Limited IGI Insurance Company (Ghana) Limited Intercontinental Wapic Insurance Ghana Limited International Energy Insurance Company Limited Mainstream Reinsurance Company Limited Metropolitan Insurance Company Limited NEM Insurance (Ghana) Limited NSIA Ghana Insurance Company Limited Phoenix Insurance Company Limited Prime Insurance Company Limited Provident Insurance Company Limited Quality Insurance Company Limited Regency Alliance Insurance Limited SIC Insurance Company Limited Star Assurance Company Limited Unique Insurance Company Limited Vanguard Assurance Company Limited Percentage (%) NIC 60

61 NONLIFE INSURANCE INDUSTRY AGGREGATED BALANCE SHEET Table 49: NonLife Insurance Industry Aggregated Balance Sheet As At 31 December, GH Note Stated Capital 116,036, Capital Surplus 76,605, Income Surplus 35,403, Contingency Reserve 91,177, Deposit for Shares 4,501, Shareholders Funds 323,725, GH 113,124, ,898, ,343, ,667, ,534, ,569, REPRESENTED BY: Fixed Assets Investment Properties 1 63,951, ,870, ,058, ,939, Long Term Investments Investments in Subsidiaries 2 113,323, ,776, ,510, ,528, ,921, ,036, Current Assets Outstanding Premiums 170,341, ,599, Other Debtors/Loans 32,423, ,069, Amount due from reinsurers 36,390, ,486, Taxation 3,511, ,808, Short term investments Cash funds/resources 3 155,980, ,048, ,603, ,395, ,696, ,962, Current Liabilities Provision for unearned Premiums 120,593, ,367, Provision for claims 63,708, ,323, Amount due to reinsurers 67,125, ,834, Bank Overdraft 412, , Creditors 55,274, ,190, Taxation 15,524, ,028, Proposed Dividend 184, ,050, ,822, ,410, Net Current Asset/Liabilities 110,873, ,551, Other Long Term Liabilities 4,069, ,019, ,069, ,019, Net Assets/Liabilities 323,725, ,569, NIC

62 Table 50: Notes to the NonLife Industry Aggregate Balance Sheet NOTE 1 FIXED ASSETS GH GH Land & Buildings Furniture, Fittings & Equipment Motor Vehicles Work in Progress Intangibles Computer Equipment 43,441, ,754, ,264, ,681, ,186, ,621, ,951, ,888, ,333, ,236, ,608, ,294, ,696, ,058, NOTE 2 LONG TERM INVESTMENTS Quoted Shares Unquoted shares Government Bonds Others Corporate Bonds 64,745, ,522, ,154, ,900, ,323, ,471, ,576, ,766, ,270, ,425, ,510, NOTE 3 SHORT TERM INVETSMENTS Treasury bills Fixed Deposits Call accounts Unit trusts Bonds 81,068, ,630, ,044, , ,980, ,429, ,156, , ,236, ,603, NIC 62

63 Table 51: Make Up Of Assets GH % GH % Fixed Assets 63,951, ,058, Investment Properties 27,870, ,939, Long Term Investments 113,323, ,510, Investments in Subsidiaries 11,776, ,528, Outstanding Premiums 170,341, ,599, Other Debtors 32,423, ,069, Amount Due from reinsurers 36,390, ,486, Taxation 3,511, ,808, Short term investments 155,980, ,603, Cash funds/resources 35,048, ,395, ,618, ,998, NIC

64 Appendices 1. Financial Reports 2. List of Registered Insurance Companies 3.. List of Registered Reinsurance Companies 4. List of Registered Broking Companies NIC 64

65 Financial Reports 65 NIC

66 Report of the Directors The Directors submit their report together with the audited financial statements of National Insurance Commission for the year ended 31st December,. STATEMENT OF DIRECTORS RESPONSIBILITIES The Directors are responsible for the preparation of the financial statements for each financial year, which give a true and fair view of the state of affairs of the Commission and of the Operating Performance and Cash flow for that period. In preparing these Financial Statements, the Directors have selected suitable accounting policies and then applied them consistently, made judgments and estimates that are reasonable and prudent and followed Ghana Accounting Standards. The Directors are responsible for ensuring that the Commission keeps proper accounting records that disclose with reasonable accuracy at any time the financial position of the Commission. The Directors are also responsible for safeguarding the assets of the Commission and taking reasonable steps for the prevention and detection of fraud and other irregularities. PRINCIPAL ACTIVITIES The principal activity of the Commission is to regulate and supervise the activities of the Insurance Companies in Ghana. FINANCIAL RESULTS (HIGHLIGHTS) The Financial results of the Commission are as summarized below: Excess of Income over Expenditure Total Assets Accumulated Fund (GH ) 970,872 4,753,127 4,131,184 (GH ) 512,439 3,836,470 3,160,312 By Order of the Board Directors Dated: NIC 66

67 Report of the Auditors INDEPENDENT AUDITORS REPORT TO MEMBERS OF NATIONAL INSURANCE COMMISSION We have examined the Financial Statements of the National Insurance Commission for the year ended 31st December, as set out on pages 68 to 79 which have been prepared under the historical cost convention and on the basis of the accounting policies set out on pages 71 and 72. RESPECTIVE RESPONSIBILITIES OF DIRECTORS AND AUDITORS The responsibility for the preparation of the Financial Statements of the Commission rest with the Directors. Our responsibility as auditors is to form an independent opinion based on the audit, on these Financial Statements and to report our opinion to you. BASIS OF OPINION We conducted our audit in accordance with International Standards on Auditing and Ghana Standards on Auditing. An audit includes examination, on test bases, of evidence relevant to the amounts and disclosures in Financial Statements. It also includes an assessment of the significant estimates and judgments made by the directors in the preparation of the Financial Statements, and of whether the accounting policies are appropriate to the Commission s circumstances, consistently applied and adequately disclosed. We planned and performed our audit so as to obtain information and explanations which we considered necessary in order to provide us with sufficient evidence to give reasonable assurance that the Financial Statements are free from material misstatement, whether caused by fraud or other irregularity or error. In forming our opinion, we also evaluated the overall adequacy of the presentation of information in the Financial Statements. OPINION In our opinion, proper books of account have been kept by the Commission and the Financial Statements audited by us, which are in agreement therewith, present in all material respect, a true and fair view of the financial position of the Commission as at 31st December, and of its result of operations and cash flows for the year then ended on the date, and comply with the Insurance Act, 2006 (Act 724) and the Ghana Accounting Standards. Signature: Partner Signing: Stephen Armaah Membership number: Name of Firm: AADS Consult (Chartered Accountants) Date: NIC

68 Income and Expenditure Account for the Year Ended 31st December, Notes INCOME (GH ) (GH ) Expenditure 1 5,868,045 4,596,585 Excess of Income over 2 (4,897,173) (4,048,146) Expenditure 970, ,439 ACCUMULATED FUND Balance as at 1st January Excess of Income over 3,160,312 2,647,873 Expenditure for year 970, ,439 Balance as at 31st December 4,131,184 3,160,312 The accounting policies and notes on pages 71 to 79 form an integral part of these financial statements. NIC 68

69 Balance Sheet as at 31st December, Notes (GH ) (GH ) NonCurrent Assets Property, Plant & Equipment 3 1,043, ,086 Equity Shares in GIC 4 40,000 40,000 1,083, ,086 Current Assets Short Term Investments 5 1,335,445 1,182,195 Accounts Receivable 6 1,520,213 1,172,317 Bank and Cash Balances , ,872 3,670,074 2,893,384 Total Assets 4, ,836,470 Current Liabilities Accounts Payable and Accruals 7 245, , , ,099 Accumulated Fund and Deferred Grant Accumulated fund 8 4,131,184 3,160,312 Deferred Grant 9 376, ,059 Deferred rent (GIC) 12,000 4,507,808 3,574,371 Total Liabilities, Accumulated Fund & Grant 4,753,127 3,836,470 The Financial Statements on pages 68 to 79 were approved by the Board of Directors on , and were signed on its behalf by: DIRECTORS The accounting policies and notes on pages 71 to 79 form an integral part of these financial statements. 69 NIC