United General Insurance (UGI) Company Limited says the growth of claims, reinsurance, cancellations and provisions for uncollectable debts were some of the major factors that affected the performance of the company in the last financial year.
UGI has posted an after-tax loss of K645 million in 2016 against a profit after-tax of K262 million in 2015.
In its audited financial statement for the financial year ending December 31, 2016, UGI says the economic environment was challenging in 2016, especially for the short-term insurance business which relies on client disposable income to pay premiums.
“Gross written premiums grew by eight percent from K4.9 billion in 2015 to K5.3 billion. The revenue registered in 2016 was battered by cancellations and provisions for uncollectable debts amounting to K941 million. The actual growth of business stood at 22 percent and the company took advantage of this to clean up its books by writing off bad debt dating back to 2015 and prior years,” UGI Chief Executive Officer, Bywell Chiwoni, said.
He said as a result of this, the company needed more capacity, leading to growth in reinsurance cost by 34 percent.
“Furthermore, claims reserves were adjusted upwards from 20 percent to 30 percent. These are provisions or reserves for claims that might have occurred but are yet to be reported to the company, and, as a result of this change, there was an additional K240 million aggravating the position. The change in reserving was because of an actuarial analysis that the company undertook during the year to test its reserving policy,” Chiwoni said.
Going forward, UGI is optimistic about its performance, saying strategies have been put in place to turn around the company’s performance and these are hinging on prudent underwriting, conservative credit and claims management focusing on delivering seamless value to customers.
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