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BIHL takes a hit as COVID claims slash Botswana Life profits

BIHL CEO: Catherine Lesetedi-Letegele

Botswana Insurance Holdings Limited (BHIL), the country largest insurance, investment and non-banking financial services group was not spared from the COVID-19 pandemic woos.

The Group ,which is anchored by its life insurance business was directly impacted by the high mortality rate in 2021, part of which were COVID-19 related deaths , resulting in high number of claims, plunging the business into a massive profit decline , the likes of which the company has never seen before.

STRUCTURE OF BIHL

BIHL Group, listed on Botswana Stock Exchange, is organized into four principal business areas based on their products and services, and these make up the four reportable operating segments being   the life insurance segment which provides life insurance services to its clients through Botswana Life Insurance Limited, Botswana’s leading life insurance Company, a full subsidiary of the BIHL group.

BIHL also has the asset management segment which provides asset management services to its customers through Botswana Insurance Fund Management Limited (BIFM), and Bifm Unit Trusts, both subsidiaries of the group.

The Group also boasts of the general insurance segment which provides short-term insurance and legal insurance to its clients through Botswana Insurance Company Limited (BIC) and BIHL Insurance Company Limited (BIHLIC), respectively – the group holds an indirect 50% interest in BIC, which in turn holds 100% of BIHLIC.

BIHL also has associate holdings of 28, 05% in Letshego Holdings Limited, 37.62% in Funeral Services Group (FSG) and 25.1% in Nico Holdings Limited (Malawi). Operating profit for the group significantly declined by 56% to P171 million for the year ended 31 December 2021 compared to the prior year while core earnings decreased

by 54% to P197 million. Profit attributable to equity holders decreased by 27% to P388 million.  The asset management business operating profit for the year is 12% higher than the prior year owing to an improved AUM position from the previous year, leading to higher fee income earned.

Share of profit of associates and joint ventures increased by 19% with the main associates being Funeral Services Group, Letshego Holdings and Botswana Insurance Company all of which reported significantly better results compared to last year. However the NICO Group performance was also adversely impacted by COVID-19 claims.

BOTSWANA LIFE

Profit after tax for BHIL’s cash cow and largest revenue earner — Botswana Life declined by 64 % from P291.9 million in December 2020 to P103 million for the year ended 31st December 2021. According to Directors this was on account of excess mortality experienced during the year. A significant part of the increase in mortality was due to COVID-19 related deaths.

Though claims skyrocketed in 2021, slashing profits, overall Botswana Life delivered a solid set of results. Income for the year grew despite the headwinds largely attributable to the COVID-19 pandemic and the slower than expected economic recovery.

Premium income grew by 7% from P2.9 billion in 2020 to P3.1 billion. Net recurring premium income grew 16% from P1.58 billion to P1.83 billion. This according to company Directors mirrors sustainable source of profit in the long term.

The company which accounts for nearly 70 percent of the local life insurance market share, raked in more new businesses in the year 2021 despite decline in profits .Total new business grew 42% with most income lines showing a recovery from 2020.

The value of new business, which represents the present value of future profits from new business premiums written during the period, grew by 37% compared to the prior year due to higher sales volumes for some retail and corporate business portfolios and a shift towards a more profitable mix of new business.

Operating profit declined by 65% year-on-year from P379 million to P134 million. The major contributor to the decline in operating profit was the unprecedented amount of COVID-19 claims which impacted all risk product lines.

The net insurance claims and benefits paid increased by 41% in total compared to the prior year. During 2021, management continued with cost optimisation initiatives to manage the cost base within optimal levels underpinned by process automation and a shift to online channels.

Digitisation was fast tracked, realising operational online streaming of sales distribution processes (end-to-end), customer self-service and collaborative e-payment platforms complementing existing traditional channels.  In line with the SeSarona five-year strategy, the business launched a new offering; Botswana Life Fiduciary Services which will assist clients with their estate planning needs.

 ASSET MANAGEMENT BUSINESS

The BIFM Group yielded a strong set of results for the financial year ended 31 December 2021. Operating profit increased by 12% compared to the prior year. BHIL Directors attributed the performance is the 18 % growth in Asset under Management (AUM), reflecting the goodwill that the company continues to build with its clients.

The Zambia business, on the other hand, realised a decline in operating profit compared to the prior year mainly due to a decline in performance fees income compared to the prior year and the depreciation of the Zambian Kwacha against the Botswana Pula.

Total Asset under Management increased by 19% to close the year at P36 billion, including Zambia’s at P5.2 billion and Bifm Unit Trust at P1.7 billion.

BIHL Group Chief Executive Officer Catherine Lesetedi said on Wednesday that the group remains well positioned in terms of capital management and solvency, noting that emphasis will be on ensuring that its capital position remains solid and aligned with future capital requirements while sustaining healthy levels of return on group equity value.The BIHL board haa resolved to award a final dividend of 71 thebe per share (net of tax).

She said going forward management will be implementing appropriate actions to mitigate COVID-19 risks to ensure the group’s value proposition remains sound going into the future.  The risk mitigating actions will include driving profitable topline growth to ensure the business can navigate the current pandemic while delivering much-needed support to our policyholders.

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Food prices continue to rise, but at a slower rate

28th November 2022

Prices for cereals or staple foods in Botswana and other Southern African countries continue to rise at a slower pace, following trends in the global markets, according to the latest November 2022 Food Price Monitoring and Analysis by Food Agricultural Organization (FAO) of the United Nations.

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Business

Still doing business the old way?

18th November 2022

It’s time to get business done better with MTN Business Botswana’s ICT Solutions.

Running a digital businessMTN Business Solutions Botswana, popularly known as MTN Business is an Internet Service Provider. We are a subsidiary of MTN Group Limited, a multinational telecommunications Group headquartered in South Africa, which operates in 19 markets across Africa and the Middle East.

More and more, clients are looking for ways to keep their staff productive in a dynamically changing business environment. Whether your people are working from home, the office or abroad, there is a growing recognition that digitising your operations can offer unprecedented commercial value in flexibility, productivity and growth. This new, digital reality means that it is more important than ever to stay agile – if there is anything that can slow a business down, it is being burdened by othatld technology.

Having made substantial investments in fibre technology, high-speed terrestrial and undersea networks and new frequency spectrum across the markets wherein it operates, MTN is perfectly positioned to respond to this shift in the market.

A few years ago, MTN also made the decision to build an IP capable radio network for its mobile services, giving its core network the ability to seamlessly integrate with enterprise IP networks. The mobile towers deliver services to enterprise clients absolutely anywhere it has a network, shortening the last mile and removing complexity and cost.

Now there is increasing demand from clients to connect their remote sites in all areas, including rural and semi- rural. MTN has assisted clients with overcoming this connectivity hurdle, enabling their staff to get the job done wherever they are.
MTN’s evolution

For MTN, the focus has shifted from just being a core telecommunications services provider, towards also becoming a technology solutions provider. The service offering now also includes Unified Communications, Data Hosting and Cloud Solutions, Security-As-A-Service and Managed Network Services. The scope has changed to being client and industry specific, so the requirements and service portfolio vary from one client to the next. The expectation is that a company like MTN must respond to these challenges, helping clients to get business done better as they shift from old to new technologies.

As many businesses continue to grapple with a digitally dynamic world, they face new challenges that have to be solved. This environment will benefit those that are more digitally enabled and agile. It is a brave new world that will favour online over on-site, wireless over wired and fluid over formulaic. Businesses will seek out partners and suppliers that are every bit as flexible and forward-looking as they are.
Ultimately, clients need partners like MTN Business that will invest in infrastructure, deliver the services they require, have market credibility, are financially sound and have a long-term commitment to their market presence.

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Business

BIE to vitalize the Dignity of Engineers

9th November 2022

Botswana Institution Of Engineers (BIE), has last week hosted a gala dinner in  which they appreciated engineers who worked tirelessly and with dedication for 10 years from 1983 to steer the BIE to its current status.

The event that was held at the Phakalane Golf Estate had brought together young, experienced and veteran engineers and was held under the theme “Vitalize the dignity and eminence of all professional engineers”.

Explaining the theme, the institution’s treasurer, Thanabalasingam Raveendran said that engineers were looked upon reverentially with respect as the educated but with time it seems to have deteriorated. He indicated that there is a need to change the narrative by all means.

“The BIE exists for the welfare and the betterment of us Botswana engineers, we need to recognize specialised units within our Institution. We Engineers strongly believe in Engineers make it happen” Raveendran said.

He indicated that under the theme they appeal to all engineers to energize, to attain quality of being worthy of honour and respect and to achieve recognized superiority amongst the Society.

Raveendran stated that engineers need to ensure their end product is of good quality satisfying the end users expectations and engineers must be honest in their work.

“Approximately 8000 engineers registered with Engineering Regulatory Board (ERB) are not members of the BIE, engineers need to make every effort to recruit them to BIE” he said.

He alluded that BIE being a society, it currently needs to upgrade itself at par with professional institutions elsewhere like the UK and USA.

He further stated that BIE has to have engineering units of specialised disciplines like Civil/Mechanical/electrical etc

“As President Masisi indicated in his inaugural speech, the young people, who make 60 percent of the population of this country, are the future leaders and therefore investing in them is building the bridge to the future” said Raveendran

Kandima indicated that BIE has a memorandum of Understanding with Engineers Registration Board (ERB), where BIE is a recognised provider of CPD training, mentorship programmes and more importantly IPD undertaking to upgrade the skills and know-how of our engineers.

“For us to achieve our mandate and make worthwhile changes to engineering in Botswana, we have to be totally focused and act with intent” said Kandima.

Furthermore, Stephen Williams, past president of the BIE from 1986-1988 told the engineers that  the BIE provides a fertile environment where they can meet, share ideas and grow professionally.

“The BIE is also a nesting place for graduate engineers to learn from their peers and seniors, it also cater for engineering technicians and technologists and so nobody in the technology field is left out” he said.

He further indicated that Botswana Government provides a conductive environment for growth of engineering professionals.

“It must be stated that the Botswana Government recognises the existence of BIE and it can further be stated that the government enables ERB to carry out its mandate as a regulator of engineering professionals” said Williams

He plead with engineering companies to recognize and support BIE as it is the only source of engineering personnel’s for various Industries .

Furthermore, when giving his farewell speech, Michael Pinard , a past president of the institution  said how they are viewed as engineers by the general public might be due to some lack of appreciation as to exactly what role they play in the development of the country.

“The BIE slogan is aptly coined-Engineers make it happen, in other words, what man dreams engineers create” Said Pinard.

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