Real Insurance Company of Malawi Limited has reported a K96 million (about $384 000) loss in the year ended December 2011, blaming increased claims, high litigation costs and heightened levels of accidents and fraud.
This is compared to a K26 million (about $104 000) loss in 2010.
In the year, the Malawi Stock Exchange (MSE)-listed insurance concern, registered a 43 percent increase in claims resulting from an increase in spare parts prices.
The company also made a provision for impairment of receivables of K70 million (about $280 000) to comply with regulatory requirements, said the statement from the company signed by chairperson Thom Kanyuka and director Dr. Rex Harawa.
The results achieved reflect the tough economic environment that characterised the economy in 2011, said the company.
“However, the company will continue to be focused, proactive and aggressive in both claim and cost control as well as premium growth with emphasis on growing the non-motor insurance portfolio. The company will continue with brand activation campaigns to promote brand image, raise awareness and also to penetrate growth markets,” said the statement.
Real registered a 14 percent growth in premium written in 2011 against six percent the year before. Gross written premiums were recorded at K1.16 billion (about $4.6m) against K1 billion (about $4m) the year before with net earned premium growing by 13 percent compared to the previous year.
The insurance firmâ€™s total asset jumped by 26 percent to K1.1 billion (about $4m) from K882.9 million (about $3.5m) with the most material increase being 43 percent in receivables.
“Deferred acquisition costs have also increase by 57 percent while property and equipment increased by six percent. Liabilities have increased by 47 percent mainly due to a 40 percent increase in unearned premiums,” said the company.
The shortage of foreign exchange last year pushed up reinsurance liabilities by 53 percent as these could not be paid timely.
Going forward, the company said it will continue to be innovative in its products offerings and services.
The company said it will continue to be innovative in its products offerings and services and has entered into partnership with certain segments of the economy to increase the premium base in order to offer better services to their customers.
As of Tuesday, Real with 250 million shares on issue traded at K1.20 per share on the local bourse.