Sanlam General Insurance made an underwriting loss of Rwf459 million, which implies that the firm lost money on its core insurance business in the year ended December 31, 2023, with motor vehicle insurance accounting for the bulk of the loss. “Increasing fraudulent cases coupled with the high cost of motor vehicle spare parts also led to the heavy underwriting losses,” the company’s acting CEO, Felix Ndatsinze told The New Times. Sanlam also attributes the underwriting loss to higher inflation and foreign exchange losses. Inflation reached an all-time high in January last year. Headline inflation started at 20.7 per cent in January 2023 before starting to come down up to 6.4 per cent by the end of the year. The US dollar, on the other hand, appreciated by 18.05 per cent against the Rwandan franc in 2023. The two factors led to an increase in Sanlam’s claims cost and impacted the company’s ability to generate more income. ALSO Read: Minister Nsabimana blames low motor-cycle insurance cover on high premiums The company’s underwriting loss is consistent with the sector outlook. In the recent past, an increase in accidents and compensations costs has seen insurance companies incur heavy losses. This has led to a significant increase in motor vehicle insurance premiums as a way to recover from these losses, despite a public outcry. Even then, this has not translated into insurers generating profit on motor insurance cover. The insurance sector made an underwriting profit in the first half of last year for the first time in six years. Profitability outlook Sanlam posted a net profit of Rwf797.5 million in 2023 from a loss of Rwf2.6 billion a year earlier. However, the firm saw its insurance revenue increase by almost 28 per cent to more than Rwf24 billion in 2023. Though underwriting forms part of its core business, the insurer has made investments in real estate, equities and government securities. Its net investment income stood at Rwf1.6 billion in 2023, a slight decline from a year before. Despite the negative performance in 2023, Ndatsinze asserted that the company stands prepared in case of any shocks, saying the firm remains well capitalised. “Sanlam has a strong capital position, with Rwf7.9 billion in share capital and more than RWF15 billion in various investments which is sufficient in case of any unforeseeable events,” he said. ALSO READ: Insurance sector makes first-time underwriting profit New product offering Apart from motor insurance, the company offers medical, property, accident, transport, engineering, liability and guarantee insurance. However, in a bid to become more competitive, Sanlam now wants to venture into new territory. “We are planning to introduce Agriculture insurance. We are working with another insurance company that has expertise in this area and preliminary design work is currently on-going so that the product can be launched in the market by end of this year,” he revealed. Sanlam is optimistic that it will weather the storm. The firm hopes to collect more premiums in 2024 projecting that it will post a Rwf26 billion in gross written premiums. Sanlam is also projecting a Rwf3 billion in profit after tax in 2024.
