PROFIT of Ghana Reinsurance PLC declined by five per cent in 2022 on account of high claims ratio and impairment losses as a result of the Domestic Debt Exchange Programme (DDEP).
The company’s profit after tax fell from GH₵51.73m in 2021 to GH¢49.50m in the year under review.
These developments impacted negatively on the Return on Equity (ROE) resulting in a decrease from 16 per cent in 2021 to 14 per cent in 2022.
In spite of the financial losses, the company declared a dividend of GH₵5m to be paid to the sole shareholder, Government of Ghana.
This is against the dividend of GH¢12m declared in 2021.
The Board Chairman of the company, George Otoo, announced this on Friday at the group’s 20th annual general meeting (AGM) in Accra.
He said an amount of GH¢248.3m was incurred as net claims for 2022, representing a 77 per cent increase over the GH¢140.2m recorded in 2021.
This deteriorated claims percentage rose from 43 per cent to 58 per cent in 2022.
The increase, he said, was attributable to the Oil Marketing Companies (OMC) bond claims and the depreciation of the cedi in the second half of 2022.
Mr Otoo said shareholder’s equity grew by 20 per cent from GH¢ 435.75 m in 2021 to GH¢521.72m in 2022.
The Board Chairman said gross premium income recorded for the year under review was GH¢550.23m compared to the 2021 figure of GH¢385.92m representing an increase of 42 per cent.
“General business contributed about 95 per cent of the Group gross premium which represents GH¢520.69m in absolute terms.
This represents a growth of about 45 per cent of the 2021 figure.
The largest contributor to this key achievement is the gross premium from Fire Business which contributed about 63 per cent to the premium generated from General Business and 59 per cent to the total premium recorded by the group,” he said.
He said Life business portfolio contributed five per cent to the group’s total gross premium, adding that “the gross premium increased from GH¢26.58m in 2021 to GH¢29.54m in 2022, this represents a growth of 11 per cent.”
Mr Otoo explained that the group in compliance with International Financial Reporting Standards (IFRS) recognised an impairment loss of GH₵60.60m in 2022 as a result of DDEP.
“The provision covered its holdings in GOG bonds, treasury bills and Euro bonds, the GHS60.60m provided for under International Accounting Standards (IAS 39) impacted negatively on the profit for the year,” he said.
He said the company’s Capital Adequacy Ratio (CAR) for 2022 was 315 per cent far above the minimum regulatory figure of 150 per cent.
He added that the board and management of the company have put in place measures to mitigate the negative impact that it will have on the group’s liquidity, profitability and solvency position going forward.
The Board Chairman explained that 2022 marked the year two of the three-year strategic plans of the company have seen tremendous progress in the four pillars of the strategic plan.
He gave an assurance that the company would be able to meet most of the targets set in the strategic plan, notwithstanding the challenges of the economic environment which was not envisaged when the strategic plan was drawn.
Reacting to the dividend declared, the Acting Head of Public Entities and Assets Unit, Public Investments and Assets Division (PIAD) at the Ministry of Finance and Economic Planning (MoFEP), Kwame Okyere-Mensuo, expressed appreciation to the group for the dividend despite the economic adversity.
“We appreciate the dividend because some companies did not declare a dividend due to recapitalisation and global economic crisis. However, we expect an increase and we hope to recover from our economic challenges,” he said.