Foreign Currency Operations to Help the Insurance Industry

The Chronicle

Sikhulekelani Moyo, business journalist
THE GOVERNMENT’S decision to enshrine foreign exchange transactions alongside local currency in law is crucial to help the sector preserve its value in the face of inflationary pressures while improving service delivery.

FBC Insurance Chairman Ms Chipo Mtasa said so in her statement accompanying the company’s financial report for the full year ended December 31, 2022.

She said the insurance industry was being heavily affected by a hyper-inflationary environment, with premiums written in local currency being rapidly eroded while claims and expenses are incurred in current terms.

Mrs. Chipo Mtasa

“The industry welcomes the fact that it can now underwrite business in foreign currencies, which helps preserve value and improve service delivery,” she said.

“The volatility in the foreign exchange market continues to weigh on the industry as a whole, with the average cost of claims increasing.”

Ms Mtasa said the operating environment remains a challenge, particularly for the insurance industry, as businesses and individuals focus on survival due to the effects of the Covid-19 pandemic and the environment. of hyperinflation.

“The ever-increasing cost of doing business has had a negative impact on the performance of the industry as a whole.

“Despite all the challenges, the company delivered a positive performance supported by strong investment income from strong hedged positions and inflation-linked assets,” she said.

Meanwhile, Ms Mtasa said insurance company FBC recorded pre-tax inflation-adjusted profit of $52 million and after-tax profit of $44 million for the year ended December 31, 2021. .

She said the business performed well despite the many challenges encountered during the year.

“Insurance premium income for the year ended December 31, 2021 was $969 million and net insurance income was $531 million, while total net income for the period was $826 million. dollars,” Ms Mtasa said.

“Performance was further bolstered by total net investment income of $295 million.

“As inflationary pressures negatively impacted premium income, the focus shifted to hedging via a robust investment strategy, which delivered positive results,” she said. — @SikhulekelaniM1