Diversified financial house, BIHL has put a smile on its shareholders’ faces by declaring a 31 percent increase in dividends to P154 million, despite operating in a challenging economic environment.
In the first six months of the year, BIHL’s revenues breached the P2 billion mark largely on the back of a significant 68 percent jump in the life insurance division’s annuity business.
“The directors have declared a dividend of 55 thebe per share, gross of tax. This will amount to P154 million and it’s quite pleasing for us, especially as it comes at a time when the markets are in turbulence. The higher payout is on the back of a significant jump in our operating profit, which rose 25 percent to P188 million while our net insurance premium increased by an impressive 32 percent to P1.3 billion,” CEO Gaffar Hassam said at a media briefing yesterday.
The dividend payout represents a boon for BIHL shareholders as it comes when most financial services companies are posting lukewarm financial results. The top shareholders in BIHL include South Africa’s Sanlam (58%), BPOPF (16%) and MVA Fund (3.8 %).
In the period, BIHL’s largest subsidiary Botswana Life Insurance Limited (BLlL) registered a 33 percent growth in premium income from P972 million to P1.3 billion which added to the significant 17% growth in the group’s operating profit to P188 million.
“Botswana Life Insurance Limited was once again the biggest contributor to our revenues and this was largely due to a big rise in our annuity business which fetched P805 million in new annuity contracts in the six months.
“In the period, we witnessed a significant rise in retirees coming to acquire annuity policies with us while a significant portion of that income came from one large corporate which outsourced its in-house defined pension benefit scheme to Botswana Life,” Hassam told Mmegi Business.
An annuity is a financial product in which a life insurance company makes a series of future regular payments to a buyer (annuitant) in exchange for the immediate payment of a lump sum. The lump sum is usually from a retiree seeking a regular income during retirement. To match these annuity liabilities, which currently stand at P5.4 billion in total, Botswana Life invests the funds mostly in long-term government and corporate bonds.
BIHL’s second largest subsidiary, BIFM still managed to post a P17 million profit, although it was 30 percent lower than last year due to the decline in assets under management.
In the period, BIFM’s assets under management fell 26 percent to P20.6 billion due to the loss of a mandate from the Botswana Public Officers Pensions Fund (BPOPF).
The asset management division’s operations in Zambia performed satisfactorily, according to Hassam but second half performance is likely to be impacted by the challenges currently faced by that economy. BIHL’s embedded value printed at P4.1 billion, six percent above the same period last year.