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Underwriting cycle on soft run – Claasen

The insurance space is ripe for growth, considering the low 1 percent market penetration of the sector in Botswana. However, the oldest short term insurer in the country, Botswana Insurance Company, is looking at playing in the blind spot to generate more business and grow.

Botswana’s insurance market penetration is on par with the rest of the continent, excluding South Africa, with a figure of 14, 28 percent, whose highly developed industry far surpasses the worldwide penetration figure of 3.5 percent to 6 percent.

Besides increased competition in the market with more players coming into the insurance space in the last five years, there is competition coming from all over the world including South Africa, China, India and the rest of Africa.

“Unfortunately, it becomes more of a rate issue then a service issue,” said Claasen.

But Claasen said that underwriting cycle, globally, is soft at the moment.

An underwriting cycle is said to begin when insurers tighten their underwriting standards and sharply raise premiums after a period of severe underwriting losses. Stricter standards and higher premium rates often bring dramatic increases in profits, attracting more capital to the insurance industry and raising underwriting capacity.

On the other hand, as insurers strive to write more premiums at higher levels of profitability, premium rates may be driven down and underwriting standards relaxed in the competition for new business. Profits may erode and then turn into losses if more tax underwriting standards generate mounting claims. The stage would then be set for the cycle to begin again.

The underwriting cycle is considered a risk for the insurance sector as it requires quick recognition so that insurers can acclamatise and change swiftly enough.

Claasen, earlier this year, said told this publication that: “With increased competition, obviously the market becomes a little bit more difficult and more competitive. But over and above that, your broker community has also increased quite significantly and the biggest proportion of business in short term insurance is generated from brokers so this means competition has grown and that puts pressure on rates.”

Having recently reached a milestone in celebrating its 40th anniversary in business operations, BIC, last week launched a new more interactive website that allows claims to be made and processed online.  Claasen told BusinessPost that the company will be bringing in more technology use with mobile apps and software aimed at creating client convenience, using technical devices for.

Claasen said that potential lies in the Agriculture insurance product whose take up has been slow but word is bound to spread about some significant pay outs that have been made recently, that are likely to galvanise farmers into taking out insurance.

BIC is a subsidiary of Masawara Plc which is listed on the Aim London Stock Exchange and has interests across Africa, various sectors. BIC has a AA- credit rating and services 17,000 clients directly as well as through agency and broker channels.

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China’s GDP expands 3% in 2022 despite various pressures

2nd February 2023
China’s Gross Domestic Product (GDP) expanded by 3% year-on-year to 121.02 trillion yuan ($17.93 trillion) in 2022 despite being mired in various growth pressures, according to data from the National Bureau Statistics.

The annual growth rate beat a median economist forecast of 2.8% as polled by Reuters. The country’s fourth-quarter GDP growth of 2.9% also surpassed expectations for a 1.8% increase.

In 2022, the Chinese economy encountered more difficulties and challenges than was expected amid a complex domestic and international situation. However, NBS said economic growth stabilized after various measures were taken to shore up growth.

Industrial output rose 3.6% in 2022 over the previous year, while retail sales slightly shrank by 0.2% data show that fixed-asset investment increased 5.1% over 2021, with a 9.1% hike in manufacturing investment but a 10% fall in property investment.

China created 12.06 million new jobs in urban regions throughout the year, surpassing its annual target of 11 million, and officials have stressed the importance of continuing an employment-first policy in 2023.

Meanwhile, China tourism market is a step closer to robust recovery. Tourism operators are in high spirits because the market saw a good chance of a robust recovery during the Spring Festival holiday amid relaxed COVID-19 travel policies.

On January 27, the last day of the seven-day break, the Ministry of Culture and Tourism published an encouraging performance report of the tourism market. It said that domestic destinations and attractions received 308 million visits, up 23.1% year-on-year. The number is roughly 88.6% of that in 2019, they year before the pandemic hit.

According to the report, tourism-related revenue generated during the seven-day period was about 375.8 billion yuan ($55.41 billion), a year-on-year rise of 30%. The revenue was about 73% of that in 2019, the Ministry said.

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Jewellery manufacturing plant to create over 100 jobs

30th January 2023

The state of the art jewellery manufacturing plant that has been set up by international diamond and cutting company, KGK Diamonds Botswana will create over 100 jobs, of which 89 percent will be localized.

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Investors inject capital into Tsodilo Resources Company

25th January 2023

Local diamond and metal exploration company Tsodilo Resources Limited has negotiated a non-brokered private placement of 2,200, 914 units of the company at a price per unit of 0.20 US Dollars, which will provide gross proceeds to the company in the amount of C$440, 188. 20.

According to a statement from the group, proceeds from the private placement will be used for the betterment of the Xaudum iron formation project in Botswana and general corporate purposes.

The statement says every unit of the company will consist of a common share in the capital of the company and one Common Share purchase warrant of the company.

Each warrant will enable a holder to make a single purchase for the period of 24 months at an amount of $0.20. As per regularity requirements, the group indicates that the common shares and warrants will be subject to a four month plus a day hold period from date of closure.

Tsodilo is exempt from the formal valuation and minority shareholder approval requirements. This is for the reason that the fair market value of the private placement, insofar as it involves the director, is not more than 25% of the company’s market capitalization.

Tsodilo Resources Limited is an international diamond and metals exploration company engaged in the search for economic diamond and metal deposits at its Bosoto Limited and Gcwihaba Resources projects in Botswana.  The company has a 100% stake in Bosoto which holds the BK16 kimberlite project in the Orapa Kimberlite Field (OKF) in Botswana.

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