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National Insurance Commission I 2008 Annual Report
1
CONTENTS PageForeword 2 Chairman’s Report 3
THE NATIONAL INSURANCE COMMISSIONBoard of Directors 4 Management Team 4 NIC’s Operations 5 THE INSURANCE MARKET2008 Economic Environment 10 Ghana Insurance Market Report (2004 – 2008) 11 Insurance Market Financial & Ratio Analysis 22Conclusion 57
APPENDICES1. Corporate Information 59 2. 2008 Financial Reports 603. Solvency Guidelines 73 4. List of Registered Insurance Companies 76 5. List of Registered Reinsurance Companies 80 6. List of Registered Insurance Broking Companies 807. List of Registered Loss Adjusting Companies 848. List of Registered Reinsurance Broking Companies 84
National Insurance Commission I 2008 Annual Report
2
FOREWORD
MICROINSURANCE PRODUCTS IN GHANA
IntroductionMicroinsurance is defined by Michael J. Mccord, a microinsurance expert as “risk-pooling products that are designed to be appropriate for the low income market in relation to cost, terms, coverage and delivery mechanisms”. Microinsurance can help people improve their financial standing and help them protect their gains.
The Informal Sector of the Economy in Ghana
The National Insurance Commission (NIC) has always conducted a systematic public education programme nationwide in an effort to explain the need and value of insurance to the public. In order to achieve a high insurance penetration in Ghana, the industry has to develop microinsurance products for people in the informal sector who are mostly traders, artisans, drivers and farmers. The Anidaso policy developed by Glico Life Insurance Company Limited is an example of these insurance products. Other companies should be encouraged to develop more microinsurance products.
Pilot Testing and Product Development
The introduction of microinsurance products must be preceded by market research in order to identify the risks which are generally faced by the target group for microinsurance. Some of the risks may be health-related in which case the product demanded may be a health insurance policy or a health care plan. Some products may be tied to loans which a microfinance institution may give to the people involved.
Having identified the needs of the people, it may then be necessary to consider the delivery channels which will be most effective. Pilot testing will be done to find out whether the product developed will really satisfy the needs of the people. After pilot testing, the company can then go to product design and consider the channels of distribution.
Legislation and Supervision
The NIC will have to be able to regulate the business of microinsurance as the other classes of insurance under the Insurance Act, 2006 (Act 724). The International Association of Insurance Supervisors (IAIS) has recognised the importance of microinsurance.
Microinsurance will be one of the topics to be discussed at the Regional Seminar for African Insurance Supervisors to be organised in Ghana in October, 2009.
Insurance regulations may impose special licensing requirements for Microfinance Institutions acting as insurance agents. Microinsurance products for low-income markets frequently require the insurance Commission’s approval.
Conclusion
Microinsurance will be a means of developing products to insure the large informal sector in Ghana and allow the Insurance industry to increase the level of insurance penetration. The NIC organised a seminar on Microinsurance with the German Technical Cooperation (GTZ) in September 2008. As we move forward, it is hoped this collaboration will continue.
National Insurance Commission I 2008 Annual Report
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CHAIRMAN’S REPORT
The year 2008 witnessed Global Financial Crisis which affected the economies of major industrial countries. Fortunately, this did not have any direct adverse effect on the Insurance Industry in Ghana.
Industry Performance
It is worthy to note that bancassurance had a boost with the collaboration of Glico Life Insurance Company Limited and National Investment Bank Limited (NIB). This was approved in 2008. This is a trend which is likely to continue in the future. It is our hope that the banks will act as distribution channels for some of our insurance products in order to increase insurance penetration for the industry.
The growth in premium income of non-life business continued to be phenomenal registering 31.9% for 2008. Total non-life premiums increased from GH¢70.20million in 2004 to GH¢187.25million in the year 2008.
Life business did not grow as much as it did in 2007. Life business recorded a growth rate of 32% in 2008 as compared to 36% in 2007. There is the need to do more marketing of the new products which the companies have introduced to the market especially funeral insurance products.
Insurance Penetration
Insurance penetration for 2008 was 1.57%, a very low rate as compared to jurisdictions like South Africa with a rate of 12.7%. Some of our companies have started developing micro insurance products for the informal sector. It is our firm belief that such new products which will meet the needs of people in the informal sector will be developed and there should be continuous public education on the part of the NIC and also the insurance companies.
National Insurance Commission I 2008 Annual Report
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Board of Directors: Lt. Gen. Joseph Henry Smith (Chairman)
Ms. Josephine Jennifer Amoah (Commissioner)
Mr. Stephen Korbla Okudzeto
Mr. William F. Duncan
Col. John Armah Okai
Mrs. Evelyn Pra-Gohoho
Mr. Wilfred Sam-Awortwi
Dr. Daniel N. Tapang
Mr. Wilson Q. Tei
Mr. Enoch Hemmans Cobbinah
Secretary: Mr. Ernest Frimpong
Senior Management: Ms. Josephine Jennifer Amoah Commissioner
Mrs. Nyamikeh Kyiamah Deputy Commissioner
Mrs. Emma Araba Ocran Legal Director
Mr. Michael Kofi Andoh Head, Supervision
Mr. Joseph Bentor Head, Finance & Administration
Mr. Isaac Yaw Buabeng Head, Marketing, Research & External Relations
Mr. Martin Dornor Abayateye Internal Auditor
Auditors: Osei Kwabena & Associates
(Chartered Accountants)
71 Palace Street, B603/18
eihsenaK htroN
67201 xoB .O .P
htroN-arccA
Registered Office: National Insurance Commission
Independence Avenue
egdiR htroN
P. O. Box CT 3456, Accra
THE NATIONAL INSURANCE COMMISSION CORPORATE INFORMATION
National Insurance Commission I 2008 Annual Report
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NIC OPERATIONS
LICENSING
As at December 31, 2008, the number of licensed insurance entities were as follows;Non-life Companies: 21
Life Companies: 17
Reinsurance Companies: 2
Insurance Brokers: 36
Reinsurance Broker: 1
Loss Adjuster: 1
New Insurance Companies
Four (4) new non-life companies and one life company were licensed in 2008. These were Equity Assurance Ghana Limited, International Energy Insurance Ghana Limited, Intercontinental Wapic Insurance Ghana Limited, Nem Insurance Ghana Limited and Express Life Insurance Company Limited. All the non-life companies are subsidiaries of Nigerian insurance companies.
Beacon Insurance Company remained unlicensed as at the end of 2008. It is therefore the only existing company which is yet to successfully go through the separation and re-licensing required under Act 724.
New and Re-licensed Brokering Companies
Four broking firms were added to the list in 2008. Two new brokers, namely: Asterix Brokers Limited and Shield Insurance Brokers Limited were licensed. Two existing broking companies, Saviour Insurance Brokers Limited and Newland Risk Management Limited finally met the re-licensing requirements and were duly re-licensed in December, 2008.
Bancassurance
A bancassurance collaboration between Glico Life Insurance Company Limited and National Investment Bank Limited was approved in 2008. Under this agreement, the bank as a corporate agent will use its branch network to sell the insurance products of Glico Life Insurance Company Limited to its clients. This is the second bancassurance collaboration. The first was between Enterprise Life and Standard Chartered Bank which was approved in 2007.
Agents
Seven hundred (700) new agents were licenced in 2008, while the licences of 1,100 existing agents were renewed. This brought the total number of agents officially registered with the NIC to about 1,800 although it estimated that there are about 4,000 agents selling insurance products.
COMPLIANCE
To assess compliance with Act 724, all branches of insurance companies in all the regions were inspected
National Insurance Commission I 2008 Annual Report
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in 2008. To help improve compliance and protect the insuring public, the Commission is developing guidelines to regulate the operation of branch offices of insurance companies.
In addition, the Commission effectively conducted on-site inspections of Ten (10) insurance companies and ten (9) broking companies within the year.
Reinsurance Premium Transfer
The Commission approved the following amounts as reinsurance premium to be transferred to overseas companies. These were US$2.26 million, £7,400, €76,000 and the dollar equivalent of GH¢752,000. The local companies involved were Ghana Reinsurance, Ghana Union, Enterprise Insurance, SIC Insurance, Global Alliance, Phoenix Insurance, CDH Insurance and Metropolitan Insurance Company Limited.
PRODUCT APPROVALS
The Commission approved the following products for sale in accordance with section 45 (1) of Insurance Act 2006, Act 724.
Product Class of Business Company
1 Family Income Protection Plan Life Enterprise Life Ass. Co. Ltd.
2 Education Endowment Policy Life Enterprise Life Ass. Co. Ltd.
3 Funeral Insurance Plan Life Phoenix Life Ins. Co. Ltd.
4 Funeral Insurance Plan Life Ghana Union Ass. Co. Ltd.
LEGAL MATTERS
There was a phenomenal increase in the activities of the legal department following the passage of the new Insurance Act, 2006 (Act 724). The department in performing its core function of offering Legal opinion to the Commission also supported the Supervision department in the enforcement of the relevant sections of the Law to ensure compliance.
The Commission continued to follow up on criminal and civil cases pending at the Law courts.
Complaints and Settlements Bureau
With the necessary cooperation from insurance companies and petitioners, the Commission successfully handled petitions and complaints from the public against various insurance companies. Most complaints were from persons with motor insurance claims against insurance companies. Apart from the main motor and life insurance complaints, the Commission also handled inter-industry complaints referred to it and special complaints from staff against management, insurance companies against insurance brokers and vice versa.
National Insurance Commission I 2008 Annual Report
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At the year ending 2008, Two hundred and forty-five (245) complaints were received from the public against insurance companies:
Insurance Companies No. of Complaints
1. SIC Insurance Company Limited 66
2. Network Assurance Company Limited 48
3. Star Assurance Company Limited 35
4. Unique Insurance Company Limited 20
5. Uninsured 20
6. Enterprise Life Assurance Company Limited 8
7. Donewell Insurance Company Limited 7
8. Vanguard Assurance Company Limited 6
9. Quality Insurance Company Limited 6
10. Metropolitan Insurance Company Limited 6
11. Ghana Life Insurance Company Limited 6
12. Metropolitan Life Insurance Company Limited 5
13. Provident Insurance Company Limited 3
14. Ecowas Brown Card 3
15. C.D.H Insurance Company Limited 3
16. The Great African Insurance Company Limited (delisted) 2
17. Reliance Insurance Company Limited (delisted) 1
Total 245
Motor Compensation Fund
The Compensation Fund Committee intensified its operations in 2008. The Committee met four times during the year. The meetings discussed among others; the prudent management and investment of funds, various technical issues relating to motor insurance and the payment of reasonable levels of compensation to petitioners.
Members also reviewed special petitions referred to it by the Awards Sub-committee, which met fortnightly during the year. The Awards Sub-committee of the Compensation Fund Committee had 21 sittings during which it interviewed 129 applicants during the year. The petitions received by the Committee still followed the trend of hit-and-run cases, uninsured vehicles and other petitions stemming from breach of policy conditions such as change of ownership and driving without a licence, which resulted in the repudiation of claims, by insurers.
All 129 applications received the approval of the Committee and were awarded a total of GH¢ 99,785.
The funding of the motor compensation fund remained the same as in previous years:
National Insurance Commission I 2008 Annual Report
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Finances of the Compensation Fund (2008)
GH¢
Income:
Contributions from insurance companies 287,011.00
Investment Income 194,508.00
Interest on bank account 81.00
Expenditure:
Compensation for accident victims 107,260.00
Contribution to Road Safety Commission 114,804.00
Public education 110,304.00
General expenses 53,447.00
Investments:
Shares 51,760.00
T-bills 1,202,924.00
Accumulated Fund 864,974.00
Total Amount in Rescue Fund 500,000.00
SPONSORSHIP OF INSURANCE INDUSTRY PUBLICITY ACTIVITIES
During the year under review, the Commission with the support of the Compensation Fund continued to maintain as one of its objectives, the promotion of public education on insurance in general, and motor insurance in particular.
The primary focus of these educational programmes was on the role of the NIC, Complaints & Settlement Bureau, Compensation Fund, Motor insurance in particular and Life insurance in general.
The Commission carried out public education functions in three regions and five district capitals. In all, Twelve (12) radio talk shows and Six (6) public fora with commercial drivers and the public was organized in the areas visited.
PUBLICITY
The Commission carried out a number of publicity and public education on the insurance industry. These include publications of the NIC’s newsletter “The Insurance Supervisor” and brochures on some insurance products including fire, motor, accident and life products.
INSURANCE INDUSTRY TRAINING CENTRE (IITC)
To enhance its income generating capacity, the Commission continued to rent out its conference facilities to the public.
National Insurance Commission I 2008 Annual Report
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HUMAN RESOURCE DEVELOPMENT
The Commission continued to strengthen its human resource capacity. Staff undertook a number of local training in the areas of on-site inspection, off-site analysis and technical insurance, among others.
Opportunities were offered to some staff to go on attachment with some overseas regulatory authorities in order upgrade their knowledge and professional skills.
Management also undertook some training on insurance supervision, notably in the areas of; effective monitoring and supervision, solvency, market conduct rules, risk-based supervision and consolidated supervision and management.
National Insurance Commission I 2008 Annual Report
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THE INSURANCE MARKET OVERVIEW
ECONOMIC REVIEW 2008
Ghana’s economy experienced considerable stress during 2008. For most part of the year, spiraling increase in oil prices and its knock-on effect on food prices, the world financial crises (global crunch) that turned progressively into a global recession and various global events impacted strongly on the Ghanaian economy.
Despite the resilient nature of the economy, increased government spending as a result of hosting the African Cup of Nations, the African Union and UNCTAD as well as the high oil import bill exerted some pressure on the economy. The value of the Cedi came under significant pressure against the major currencies. This, among others, led to a high fiscal and current account deficit of 14.5% and 20% of Gross Domestic Product (GDP) respectively. The culmination of all these at the time of the global crisis led to the deterioration of the macro-economic environment. Year-on-year inflation increased from 12.7% in 2007 to 18.13% at the end of 2008 with the Bank of Ghana prime rate ending the year at 17%.
With the benchmark 91-Day Treasury Bill rate at 24.7% and the 182-Day Bill at 26.2%, most banks raised their base rate above 25%. The year however, recorded a GDP growth of 7.3% as against 6.2% in 2007, the highest in Ghana for over two decades. Outlook for 2009
With the continued impact of the global economic crises, foreign direct investment, portfolio investment and private transfers including transfers from Ghanaians living abroad are expected to decline. It is unlikely that Official Development Assistance (ODA) from traditional development partners would rise even if they are able to meet outstanding pledges.
While the price of crude oil has come down significantly, the prices of Ghana’s major export commodities have declined. It is expected that the global recession would also impact negatively on non-traditional exports.
These are likely to narrow government’s fiscal maneuverability to propel a growth agenda. GDP growth is projected to fall to 5.9% in 2009 (2008: 7.3%).
National Insurance Commission I 2008 Annual Report
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GHANA INSURANCE MARKET REPORT 2004 - 2008
INDUSTRY PERFORMANCE
The insurance industry continued to make progress over the period under review. There was a general increase in premium income for both classes of business from GH¢92.5 million in 2004 to nearly GH¢276.5million in 2008. Both the Life and the Non-Life recorded a growth rate of 32% between 2007 and 2008. (Ref. Table 1). The contribution of Total Gross Premium to the Gross Domestic Product (GDP) has been rising steadily over the period but is still under the 2% mark.
Table 1: Growth in Total Gross Premium Income Non-Life and Life 2004 – 2008
Year Premium Income (¢) Growth Rate Insurance Penetration
2004 92,583,146 - 1.16%
2005 122,325,795 32.1% 1.26%
2006 164,207,266 34.2% 1.40%
2007 209,457,409 27.5% 1.49%
2008 276,494,733 32.0% 1.57%
Figure 1: Growth in Total Gross Premium Income (Life & Non-life)
Gross Non-Life Premium Income
There was a continuous growth in gross premium income for non-life business over the five-year period, although at a decreasing rate until 2008. Premium income increased from GH¢70.2 million in 2004 to GH¢187.25 million in 2008. (Ref. Table 2).
INDUST
The insu
a gener
2004 to
rate of
Gross P
period b
TRY PERFO
urance indu
ral increase
o nearly GH
32% betw
Premium to
but is still u
Fi
0
50
100
150
200
250
300
Yea
200
200
200
200
200
GHANA IN
RMANCE
ustry contin
in premium
H¢276.5mill
een 2007 a
o the Gros
nder the 2%
igure 1: Grow
Table
ar
Pre
04
05 1
06 1
07 2
08 2
NSURANCE
nued to mak
m income fo
lion in 2008
and 2008.
s Domestic
% mark.
wth in Total G
2004 200
e 1: Growth in
Non-Life
mium Incom
(¢)
92,583,146
122,325,795
164,207,266
209,457,409
276,494,733
15
E MARKET R
ke progress
or both clas
8. Both the
(Refer to t
c Product (
Gross Premiu
05 2006
n Total Gross
e and Life 200
me Grow
3
3
2
3
REPORT 20
over the pe
sses of busi
e Life and th
table 1 belo
(GDP) has
um Income (L
2007
s Premium In
04 – 2008
wth Rate
-
32.1%
34.2%
27.5%
32.0%
Natio
004 - 2008
eriod under
iness from
he Non-Life
ow). The co
been rising
Life & Non-lif
2008
ncome
Insura
Penetra
1.16
1.26
1.40
1.49
1.57
onal Insurance CommAnnual Repo
8
r review. Th
GH¢92.5 m
e recorded a
ontribution
g steadily o
fe)
ance
ation
%
%
0%
9%
%
mission ort 2008
here was
million in
a growth
of Total
over the
National Insurance Commission I 2008 Annual Report
12
Table 2: Growth in Gross Premium Income (Non-Life) 2004 - 2008
Year Premium Income (GH¢) Growth Rate
2004 70,277,997 -
2005 91,074,632 29.6 %
2006 114,597,969 25.8 %
2007 141,922,768 23.8 %
2008 187,250,912 31.9 %
Gross Life Premium Income
Gross premium for the life sector just like the non-life increased steadily but at a decreasing rate. However, the growth in this sector was higher than the non-life sector. Whereas life business recorded an average growth of 41.7% over the period, non-life had 27.7%. Life premiums increased from GH¢22.3 million in 2004 to GH¢89.2 million in 2008 (Ref. Table 3).
The future of the industry is bright especially with the introduction of new products as well as microinsurance projects. Funeral insurance continues to enjoy high patronage especially because of our cultural demands. For as long as travel insurance remains a requirement for visa application, growth in gross premiums is ensured.
Table 3: Growth in Gross Premium Income (Life) 2004 - 2008
Year Premium Income (GH¢) Growth Rate
2004 22,305,149 -
2005 31,251,163 40.1 %
2006 49,609,297 58.7 %
2007 67,534,641 36.1 %
2008 89,243,821 32.1 %
National Insurance Commission I 2008 Annual Report
13
Figure 2: Gross Premium Income (Life & Non-life)
200
2004 2005 2006 2007 2008
180
160140
120
100
80
60
40
20
0
Life
Non-Life
National Insurance Commission I 2008 Annual Report
14
Tabl
e 3:
Com
pany
Pe r
form
ance
- N
o n-L
ife
NO
. C
OM
PAN
Y 2 0
04
(GH
¢ )
2 005
(G
H¢)
2 0
06
(GH
¢)
2007
(G
H¢)
20
08
( GH
¢)
- -
659,331 288,931
760,351 deti
miL ynapmo
C ecnarusnI nocaeB 1 2
CD
H In
sura
nce
Com
pany
Li
,1 937,662,1
detim
185,
672
2,57
1,53
1 3,
918,
000
5,64
2,00
0
,2 deti
miL ynapmo
C ecnarusnI efiL lleweno
D 3
854,
904
3,40
9,98
6 4,
925,
270
7,21
3,87
9 9,
425,
567
1,101,01 deti
miL ynapmo
C ecnarusnI esirpretnE 4
53
13,8
46,9
93
13,9
97,4
00
16,5
35,0
00
19,8
86,0
00 035,255
- -
- -
detimiL ynap
moC ecnarusnI ytiuqE
5
,567,3 deti
miL ynapmo
C ecnarussA noin
U anahG
639
2 4,
723,
493
4,31
3,94
7 5,
606,
553
7,59
6,91
0
7 G
lico
Gen
eral
Insu
ranc
e C
ompa
ny L
imi
591,781,7 279,582,3
056,588,1 -
- det
8 G
loba
l Alli
ance
Insu
ranc
e C
ompa
ny L
imi
82,812,2 991,29
- det
9 2,
999,
352
6,16
3,02
1
9 In
dust
rial &
Gen
eral
Insu
ranc
e G
hana
Lim
ited
1,02
4,78
7 1,
076,
628
1,11
5,68
4 1,
234,
769
728,
263
10
Inte
rnat
iona
l Ene
rgy
Insu
ranc
e C
ompa
ny L
imite
d -
- -
- 1,
008,
250
11
Met
ropo
litan
Insu
ranc
e C
ompa
ny
9,01 935,581,9
241,113,7 deti
miL50
,999
12
,556
,397
15
,116
,792
56,049 deti
miL ynapmo
C ecnarusnI xineohP 21
9 1,
088,
988
1,32
6,12
5 2,
412,
857
6,04
7,78
4 745,863,1 004,744
- -
- deti
miL ynapmo
C ecnarusnI emirP
31
,652,2 deti
miL ynapmo
C ecnarusnI tnedivorP 41
978
2,54
1,17
0 2,
650,
388
3,41
8,44
2 3,
697,
996 645,888,5
028,012,4 201,430,3
608,097,1 976,664,1
detimiL ynap
moC ecnarusnI ytilau
Q 51
166,143 -
193,801 422,26
295,97 deti
miL ynapmo
C ecnarusnI ecnaillA ycnegeR
61
616,888,51 987,411,01
000,375,7 006,239,5
741,679,4 deti
miL ynapmo
C ecnarussA ratS
71 18
SIC
Life
Insu
ranc
e 007,883,63
000,614,52 deti
miL ynapmo
C44
,581
,800
52
,805
,558
58
,032
,081
775,383,4 988,349,3
653,951,3 272,916,2
902,666,2 deti
miL ynapmo
C ecnarusnI euqinU
91
9,279,5 deti
miL ynapmo
C ecnarussA draugna
V 02
53
6,99
0,48
2 10
,052
,080
11
,219
,091
18
,295
,576
TOTA
L 70
,25 2
, 401
91,0
74, 6
34
114,
597,
968
1 41,
922,
768
1 87 ,
250,
9 12
National Insurance Commission I 2008 Annual Report
15
T abl
e 5:
Com
p any
Per
form
ance
- L
ife
NO
. C
OM
PAN
Y 20
04
(GH
¢ )
2005
(G
H¢)
20
06
(GH
¢ )
2007
(G
H¢ )
20
08
(GH
¢)
1 Be
acon
Insu
ranc
e C
ompa
ny L
imite
d 15
2,91
0 13
4,77
8 10
7,30
9 83
,003
-
2 C
apita
l Exp
ress
Ass
uran
ce C
ompa
ny L
imite
d -
1,23
6 6,
525,
000
- -
3 C
DH
Life
Insu
ranc
e C
ompa
ny L
imite
d 23
0,32
1 24
0,06
7 73
8,78
0 79
0,00
0 1,
143,
659
4 D
onew
ell I
nsur
ance
Com
pany
Lim
ited
1,
244,
388
1,83
4,12
9 2,
377,
186
3,86
6,99
0 3,
596,
668
5 En
terp
rise
Life
Insu
ranc
e C
ompa
ny L
imite
d 2,
077,
011
3,81
2,60
6 6,
515,
948
10,1
47,8
87
15,4
29,8
97
6 G
lico
Life
Insu
ranc
e C
ompa
ny L
imite
d 3,
616,
408
4,82
6,71
4 7,
044,
878
10,6
56,0
11
12,0
48,1
93
7 G
hana
Life
Insu
ranc
e C
ompa
ny L
imite
d 1,
450,
889
1,88
5,91
7 2,
136,
970
2,26
9,78
8 2,
742,
089
8 G
hana
Uni
on A
ssur
ance
Com
pany
Lim
ited
30,7
89
54,3
30
220,
725
422,
113
597,
157
9 IG
I Life
Ass
uran
ce C
ompa
ny L
imite
d 55
,118
70
,756
73
,494
70
,636
11
1,44
8
10
Met
ropo
litan
Life
Insu
ranc
e C
ompa
ny L
imite
d 2,
126,
265
2,72
5,03
6 3,
468,
983
4,82
0,00
0 4,
583,
000
11
Phoe
nix
Insu
ranc
e C
ompa
ny L
imite
d 24
3,77
1 42
3,36
6 61
6,66
8 1,
038,
761
1,33
0,10
9
12
Prov
iden
t Life
Insu
ranc
e C
ompa
ny L
imite
d 1,
107,
872
1,60
5,16
4 2,
443,
293
1,06
8,48
8 3,
721,
209
13
Qua
lity
Insu
ranc
e C
ompa
ny L
imite
d 39
4,61
9 69
0,73
5 1,
021,
602
1,31
7,27
0 1,
705,
802
14
Star
Life
Ass
uran
ce C
ompa
ny L
imite
d 2,
260,
276
2,91
4,67
5 4,
094,
492
5,60
3,27
1 8,
196,
508
15
SIC
Life
Insu
ranc
e C
ompa
ny L
imite
d 5,
131,
000
8,20
4,40
0 14
,236
,300
21
,218
,773
27
,751
,000
16
Uni
que
Insu
ranc
e C
ompa
ny L
imite
d 36
6,39
6 52
1,40
1 27
5,31
8 30
8,41
2 49
1,14
9
17
Van
guar
d A
ssur
ance
Com
pany
Lim
ited
1,81
7,11
6 1,
305,
854
4,23
6,69
7 3,
853,
238
5,79
5,93
3
T OTA
L 2 2
, 305
, 149
31, 2
5 1,1
64
56,1
33,6
4 367
, 534
,64 1
89,2
4 3,8
21
National Insurance Commission I 2008 Annual Report
16
Table 6: Growth in Reinsurance Gross Premium Income (Non-Life)
2004 – 2008
Year Premium Income (GH¢) Growth Rate
- 632,354,12 4002
2005 24,030,847 12.0 %
2006 32,017,476 33.2 %
2007 38,399,239 19.9 %
2008 53,383,694 39.0 %
Table 7: Growth in Reinsurance Gross Premium Income (Life)
2004 – 2008
Year Premium Income (GH¢) Growth Rate
- 840,755 4002
% 7.71 - 733,854 5002
% 9.87 081,028 6002
% 9.33- 005,145 7002
2008 1,156,607 113.6 %
Reinsurance Premium Income
Growth in non-life premiums for reinsurance business witnessed marked fluctuations. For instance the rate increased from 12% in 2005 to 33.2% in 2006, and then fell sharply to 19.9% in 2007 and then in 2008 nearly doubled. In comparison to the non-life business underwritten by the direct insurers, whereas gross premium for non-life business increased at a rate of about 32%, reinsurance non-life premiums increased by 39%. This indicates that reinsurers may be taking on more external business.
Life business for the reinsurers also experienced marked fluctuations starting with a negative growth rate of -17.7% in 2004 and ending with 113.6% in 2008. It is worthy to note that Mainstream Reinsurance Company Limited did not underwrite any life business within the period.
In Ghana, the common practice is for life insurers to retain a greater part of their business for their net accounts. This is because, life insurance policies cover long periods and hence a very good source of gaining long-term funds for investment and also for growth.
National Insurance Commission I 2008 Annual Report
17
Premium Income by Class of Business (2004 - 2008)
Motor insurance continued to be the highest premium income earner throughout the period under review. This class of business increased gross premium from GH¢35.4 million in 2004 to GH¢91.5 million in 2008. It has experienced some fluctuations with respect to total market share although gross premiums continue to increase. For instance, market share decreased from 38.3% to 33.1% in 2004 and 2008 respectively. However, its contribution to non-life business was 48.9% in 2008. It may be concluded that the compulsory nature of this line of business accounts for its leading role in the total market premiums.
Accident insurance maintained its position as the second highest non-life premium earner. It recorded a gross premium income of GH¢14.9 million in 2004 and GH¢49.1 million in 2008. Just like motor insurance, it has experienced fluctuations in its market share. For instance in 2004, its market share was about 16% but this decreased to 13.6% in 2006 before picking up again to 17.8% in 2008.
Fire insurance was the third highest contributor to total non-life market premium in 2008 and recorded a gross premium income of GH¢31million in 2008 from GH¢12.5 million in 2004. Its market share was 11.2% with respect to total market premiums.
This line of insurance business has a great deal of potential especially if section 184 of Insurance Act, 2006 (Act 724) is fully implemented. The above section requires every commercial building (as well as those under construction) to be insured against the hazards of collapse, fire, earthquake, storm and flood.
Marine insurance continued to be the least contributor to total market premium. Gross premium for this line of business was just a little over GH¢3million in 2008 and a market share of 4.8%. In fact, the market share was the same for 2007 although premium income increased. This line of business can improve if all imports into the country are locally insured as a matter of policy.
Life business experienced a steady growth in premium income over the 5-year period. Growth in market share was at an increasing rate from 2004 to 2007. This however stagnated between 2007 and 2008, the increase in gross premiums not withstanding. Gross premium income increased from GH¢ 22.3 million to GH¢89.2 million in 2004 and 2008 respectively. Life companies have been innovative but there is still more to be done.
Insurance companies continued to develop new products as well modify their mode of operations. These have accounted for the continuous increase in total market premiums. The industry can go a long way if some sections of the new Insurance Law are fully implemented. Also, stakeholders may lobby government for tax incentives for life insurance policyholders or some compulsory insurance as a national policy. There are also areas such as the non-formal sector which may be vigorously tapped.
National Insurance Commission I 2008 Annual Report
18
Tabl
e 8:
Pre
miu
m I n
c om
e D
istr
ibut
ion
By C
lass
of B
usin
ess
2004
-20
08
CLA
SS
2 004
(G
H¢)
2 005
(G
H¢)
2 006
(G
H¢)
2 007
(G
H¢)
2 008
(G
H¢)
Mot
or
35,4
57,0
17.5
0 38
.3%
16.1%
7.9%
13.6%
24.1%
39.7%
14.6%
7.6%
12.5%
25.6%
18.1%
11.8%
32.2%
48,6
71,7
40.0
058
,963
,141
.80
3 5. 9
%
69,0
20,2
04.0
032
.9 %
91,5
42,4
05.0
033
. 1 %
Acc
iden
t 14
,925
,904
.70
17,7
80,4
84.0
022
,310
,799
.40
13.6
%
37,8
97,9
96.0
049
,122
,884
.00
17.8
%
Mar
ine
7,29
7,03
4.90
9,
303,
321.
009,
759,
167.
106.
0 %
9,
954,
485.
004 .
8 %
13
,132
,882
.00
4.8
%
Fire
12
,538
,890
.80
15,2
94,7
34.0
023
,427
,716
.20
14. 3
%
24,6
26,7
31.0
031
,085
,264
.00
11.2
%
L ife
/Hea
lth
22,3
05,3
70.0
0 31
,251
,163
.00
49,6
09,2
96.8
030
.2 %
67
,534
,641
.00
89,2
43,8
21.0
032
.3 %
Oth
ers *
-
- -
-
- 42
3,35
20 .
2%
2,09
7,47
7.00
0.8
%
TOT A
L 92
, 524
,217
. 90
100
122,
301 ,
442.
0 010
0 16
4,0 7
0 ,12
1.30
100
2 09 ,
457,
4 09 .
0010
0 27
6,2 2
4 ,73
3.0 0
100
*
Trav
el a
nd B
onds
National Insurance Commission I 2008 Annual Report
19
THE BROKER MARKET
Two new brokers, namely, Shield Insurance Brokers Limited and Asterix Brokers Limited were licensed in 2008.
PERFORMANCE OF THE BROKING COMPANIES
Thirty-seven (37) companies had submitted their audited accounts as at the time this report was being prepared.
Total gross commission recorded for these companies was GH¢10.03 million in 2008. Out of this, an amount of GH¢ 9.16 million constituting 90.3% was spent on management expenses.
Table 9: Brokerage Earned by Broking Companies
2004 – 2008
Company 2004
(GH¢)
2005
(GH¢)
2006
(GH¢)
2007
(GH¢)
2008
(GH¢)
1 Akoto Risk Management Limited 61,170 90,582 133,347 165,316 190,263
2 All Risks Consultancy Limited 175,315 158,571 202,245 251,295 275,864
3 Alliance Insurance Brokers & Consultants Limited
79,589 120,496 172,577 - -
4 Allied Insurance Brokers Ltd 3,156 2,988 3,287 11,198 19,354
5 Alpha Insurance Brokers Limited - - - - 263,384
6 Apex Insurance Brokers Limited - 20,513 14,205 32,421 40,643
7 Ark Insurance Brokers Company 23,640 14,020 27,506 45,132 101,520
8 Asterix Brokers Limited - - - - 7,344
9 Ceris International Limited - - - 66,116 70,596
10 Claim Limited 166,617 233,155 242,467 252,469 266,957
11 Crown Insurance Brokers 126,021 141,599 234,780 290,613 428,168
12 Danniads Limited 152,980 191,359 252,623 332,527 453,737
13 Double D & M 34,282 46,220 61,213 76,104 73,183
14 Dynamic Insurance Brokers 14,515 17,418 18,006 19,543 60,656
15 Edward Mensah, Wood & Associates 606,215 680,780 941,097 1,080,230 1,610,991
16 First Anchor Risk Management 403 5,138 14,258 21,777 52,766
17 Ghana International Insurance Brokers - - - 5,438 152,866
18 Global Impact Insurance Brokers Ltd 28,997 47,215 75,337 55,666 57,229
19 Gras Savoye Brokers Limited - - - 3,640 382,505
20 Horizon Insurance Brokers Limited 24,732 92,135 125,015 226,286 273,906
21 Insurance Centre of Excellence - - - 39,519 49,695
22 Insurance Consultancies Int. Limited 265,172 158,045 229,891 180,551 185,279
23 Inter-Africa Brokers Limited 6,186 4,421 5,164 6,524 15,747
24 International Consortium Brokers Ltd 18,527 17,962 31,838 36,970 40,717
25 JeRock Insurance Brokers - 9,086 36,342 43,637 58,616
26 KEK Insurance Brokers limited 1,654,328 2,201,940 2,642,328 2,191,152 2,781,379
27 KEK Reinsurance Brokers Limited - - - 63,367 302,231
28 Lordship Insurance Brokers 28,510 17,553 27,032 39,715 135,991
29 Manyo-Plange & Associates 7,392 8,670 13,183 19,278 28,502
30 Marine & General Brokers Limited 100,007 107,804 125,216 193,456 217,186
31 Maxpal Intermediaries 22,110 47,212 46,010 58,911 -
32 Midas Insurance Brokers Limited - - - - 38,962
33 Newland Risk Management 90,264 102,181 122,617 112,707 124,884
34 Progressive Insurance Brokers Ltd - 6,870 23,784 56,399 67,833
35 Prudent Consult Limited - 23,156 65,233 77,132 104,058
36 Safety Insurance Brokers Limited 80,630 137,181 157,216 324,055 534,470
37 Saviour Brokers 22,003 35,581 17,275 19,155 -
38 Trans-National Brokers Limited 62,331 97,598 102,364 150,977 116,070
39 Tri-Star Insurance Services Limited 196,745 250,968 171,266 264,602 297,975
40 UD Insurance Services 2,401 2,881 3,457 4,152 -
41 Universal Insurance Consultants Ltd 83,759 95,927 117,878 127,024 154,258
TOTAL 4,137,997 5,187,225 6,456,057 6,945,054 10,035,785
Management Expenses - - - 6,007,843 9,158,144
Earnings of Top 10 cos. - - - - 7,341,225
Percentage of Top 10 - - - - 73.15%
National Insurance Commission I 2008 Annual Report
20
The top 10 companies contributed GH¢7.34 million constituting a market share of 73.15% and this included KEK, Edward Mensah, Wood and Associates, Safety, Danniads and Crown Brokers among others. KEK Insurance Brokers Limited continued to lead the market with GH¢ 2.78million; however, its market share dwindled to 27.7% in 2008 from the previous year’s of 31.5%.
It is worthy to note that Safety Insurance Brokers Limited was the third highest in terms of brokerage, moving up a step from the previous year.
16 First Anchor Risk Management 403 5,138 14,258 21,777 52,766
17 Ghana International Insurance Brokers - - - 5,438 152,866
18 Global Impact Insurance Brokers Ltd 28,997 47,215 75,337 55,666 57,229
19 Gras Savoye Brokers Limited - - - 3,640 382,505
20 Horizon Insurance Brokers Limited 24,732 92,135 125,015 226,286 273,906
21 Insurance Centre of Excellence - - - 39,519 49,695
22 Insurance Consultancies Int. Limited 265,172 158,045 229,891 180,551 185,279
23 Inter-Africa Brokers Limited 6,186 4,421 5,164 6,524 15,747
24 International Consortium Brokers Ltd 18,527 17,962 31,838 36,970 40,717
25 JeRock Insurance Brokers - 9,086 36,342 43,637 58,616
26 KEK Insurance Brokers limited 1,654,328 2,201,940 2,642,328 2,191,152 2,781,379
27 KEK Reinsurance Brokers Limited - - - 63,367 302,231
28 Lordship Insurance Brokers 28,510 17,553 27,032 39,715 135,991
29 Manyo-Plange & Associates 7,392 8,670 13,183 19,278 28,502
30 Marine & General Brokers Limited 100,007 107,804 125,216 193,456 217,186
31 Maxpal Intermediaries 22,110 47,212 46,010 58,911 -
32 Midas Insurance Brokers Limited - - - - 38,962
33 Newland Risk Management 90,264 102,181 122,617 112,707 124,884
34 Progressive Insurance Brokers Ltd - 6,870 23,784 56,399 67,833
35 Prudent Consult Limited - 23,156 65,233 77,132 104,058
36 Safety Insurance Brokers Limited 80,630 137,181 157,216 324,055 534,470
37 Saviour Brokers 22,003 35,581 17,275 19,155 -
38 Trans-National Brokers Limited 62,331 97,598 102,364 150,977 116,070
39 Tri-Star Insurance Services Limited 196,745 250,968 171,266 264,602 297,975
40 UD Insurance Services 2,401 2,881 3,457 4,152 -
41 Universal Insurance Consultants Ltd 83,759 95,927 117,878 127,024 154,258
TOTAL 4,137,997 5,187,225 6,456,057 6,945,054 10,035,785
Management Expenses - - - 6,007,843 9,158,144
Earnings of Top 10 cos. - - - - 7,341,225
Percentage of Top 10 - - - - 73.15%
National Insurance Commission I 2008 Annual Report
21
National Insurance Commission Annual Report 2008 27
Table 11: Growth in Commissions Earned
2004 - 2008
Year Commission Earned
(¢’000)
Growth Rate
(%)
2004
4,137,998
-
2005
5,187,223
25.3
2006
6,456,058
24.5
2007
6,944,359
7.6
2008 10,035,784 44.5
From Table 11 below, it is obvious that growth in brokerage has been at a decreasing rate. There was a drastic fall between 2006 and 2007 just like the Life business of direct insurers. The growth rate between 2007 and 2008 was remarkable; from 7.6% to 44.5%. This could be as a result of a number of reasons including the introduction of innovative products, the licensing of a foreign broking firm and vigorous selling by brokers.
National Insurance Commission Annual Report 2008 26
The top 10 companies contributed GHC7.34 million constituting a market share of 73.15%
and included KEK, Edward Mensah, Wood and Associates, Safety, Danniads and Crown
Brokers among others. KEK Insurance Brokers Limited continued to lead the market with
GHC 2.78million; however, its market share dwindled to 27.7% in 2008 from the previous
year’s of 31.5%.
It is worthy to note that Safety Insurance Brokers Limited was the third highest in terms of
brokerage, moving up a step from the previous year.
Table 10: Market Share by Brokerage
2005 – 2008
Company 2005
(%)
2006
(%)
2007
(%)
2008
(%)
1 KEK Insurance Brokers Limited 42.5 41 32 27.7
2 Edward Mensah, Wood & Associates 13.1 14.5 15.8 16.1
3 Safety Insurance Brokers Limited 2.6 2.4 4.7 5.3
4 Danniads Limited 3.7 3.9 4.9 4.5
5 Crown Insurance Brokers 2.7 3.6 4.3 4.3
6 Tri-Star Insurance Services Limited 4.8 2.6 3.9 3.0
7 All Risks Consultancy Limited 3.1 3.1 3.7 2.7
8 Claim Limited 4.5 3.7 3.7 2.7
9 Marine & General Brokers Limited 2.1 1.9 2.8 2.2
10 Insurance Consultancies Int. Limited 3.1 3.5 2.6 1.8
11 Others 17.8 19.8 21.6 29.7
TOTAL 100 100 100 100
From Table 11 below, it is obvious that growth in brokerage has been at a decreasing rate.
There was a drastic fall between 2006 and 2007 just like the life business of direct insurers.
The growth rate between 2007 and 2008 was remarkable from 7.6% to 44.5%. This could
be as a result of a number of reasons including the introduction of innovative products, the
licensing of a foreign broking firm and vigorous selling by brokers.
National Insurance Commission I 2008 Annual Report
22
INSURANCE MARKET FINANCIAL AND RATIO
ANALYSIS
INTRODUCTION
The 2008 insurance market financial and ratio analysis have been slightly varied from that of previous years. Following the separation of Life and Non-life businesses in 2007 as required by the Insurance Act, 2006 (Act 724), the ratio analysis has now been done separately for Life and Non-life companies.
This gives the opportunity to highlight the importance of certain ratios which may be of more relevance to either Life or Non-life. It also makes it possible to compare the two sectors in certain respects, to identify the causes of some problematic areas that need specific attention and generally present a clearer picture of the performance of the two sectors. The industry Balance Sheets have also been done for Life and Non-Life companies separately.
Interestingly, both the Life and the Non-Life industries grew at 32% in 2008. This is a clear departure from the trend in previous years whereby the Life sector grew at a significantly faster rate than the Non-Life sector. The major growth indicators for both Life and Non-Life sectors are summarized in the tables below.
INSURANCE MARKET FINANCIAL AND RATIO ANALYSIS INTRODUCTION The 2008 insurance market financial and ratio analysis have been slightly varied from that of
previous years. Following the separation of life and non-life businesses in 2007 as required
by the Insurance Act, 2006 (Act 724), the ratio analysis have now been done separately for
Life and Non-life companies.
This gives the opportunity to highlight the importance of certain ratios which may be of
more relevance to either life or non-life. It also makes it possible to compare the two sectors
in certain respects to identify the causes of some problems areas that need specific attention
and generally present a clearer picture of the performance of the two sectors. The industry
Balance Sheets have also been done for Life and Non-Life separately.
Interestingly, both the Life and the Non-Life industries grew at 32% in 2008. This is a clear
departure from the trend in previous years whereby the Life sector grew at a significantly
faster rate than the Non-Life sector. The major growth indicators for both Life and Non-Life
sectors are summarized in the tables below.
Table 12: Key Growth Indicators (LIFE) 2007 - 2008
Indicator 2007 (GH¢’ m)
2008 (GH¢’ m)
Growth Rate
Premium Income 67.5 89.2
32%
Total Assets 134.9 193.6
43%
Total Investments 93 131.5
41%
Actuarial Liabilities 81.2 119.6
46%
Total Capitalisation 45.5 64.2
41%
National Insurance Commission I 2008 Annual Report
23
Using an average of the growth indicators, it can be concluded that the Life sector grew by about 40% whiles the Non-Life grew by about 36%. (The premium debtors growth has been excluded from the Non-life average). It is important to note that premium debtors grew almost twice as fast as the non-life premiums. The rather low growth rate of investments is mainly due to the high accumulation of premium debtors which deprive the Non-life companies of investible funds.
The industry average ratios have also been summarized in table 13 below.
Table 13: Key Growth Indicators (NON-LIFE) 2007 - 2008
Indicator 2007 (GH¢’ m)
2008 (GH¢’ m)
Growth Rate
Premium Income 141.9 187.2 32 %
Premium Debtors 71.1 114.3 61 %
Total Assets 286.3 405.5 42 %
Total Investments 122.2 158 29 %
Technical Provisions 75.7 93 23 %
Total Capitalisation 131 201.3 54 %
Using an average of the growth indicators, it can be concluded that the Life sector grew by
about 40% whiles the Non-Life grew by about 36%. (The premium debtors growth has been
excluded from the non-life average). It is important to note that premium debtors grew
almost twice as fast as the non-life premiums. The rather low growth rate of investments is
mainly due to the high accumulation of premium debtors which deprive the non-life
companies of investible funds.
The industry average ratios have also been summarized in table 13 below.
Table 13: Industry Average Ratios 2007 - 2008
RATIO NON-LIFE LIFE
2007 2008 2007 2008
63 13 71 61 )%( smialC
04 23 43 03 )%( esnepxE
67 36 15 64 )%( denibmoC
61 7 12 81 )%( ytiuqE no nruteR
Table 13: Key Growth Indicators (NON-LIFE) 2007 - 2008
Indicator 2007 (GH¢’ m)
2008 (GH¢’ m)
Growth Rate
Premium Income 141.9 187.2 32 %
Premium Debtors 71.1 114.3 61 %
Total Assets 286.3 405.5 42 %
Total Investments 122.2 158 29 %
Technical Provisions 75.7 93 23 %
Total Capitalisation 131 201.3 54 %
Using an average of the growth indicators, it can be concluded that the Life sector grew by
about 40% whiles the Non-Life grew by about 36%. (The premium debtors growth has been
excluded from the non-life average). It is important to note that premium debtors grew
almost twice as fast as the non-life premiums. The rather low growth rate of investments is
mainly due to the high accumulation of premium debtors which deprive the non-life
companies of investible funds.
The industry average ratios have also been summarized in table 13 below.
Table 13: Industry Average Ratios 2007 - 2008
RATIO NON-LIFE LIFE
2007 2008 2007 2008
63 13 71 61 )%( smialC
04 23 43 03 )%( esnepxE
67 36 15 64 )%( denibmoC
61 7 12 81 )%( ytiuqE no nruteR
National Insurance Commission Annual Report 2008 30
69 89 26 46 )%( noitneteR
Investment Income as a % of Investments (%) 10 9 6 11
Investment Income as a % of Premiums (%) 6 6 16 18
x2.1 x8.1 x9.1 ytiuqE ot muimerP ssorG 2.0x
x9.1 x2.1 x0.1 x0.1 ytiuqE ot muimerP teN
x5.2 x3.2 x5.1 x5.1 seitilibaiL ot latipaC
Outstanding premiums as % of Gross Premium (%) 34 43 - -
Outstanding premiums as a % of Total Assets (%) 25 29 - -
Underwriting Profit as a % of Gross Premium (%) 4 2 -16 -16
4 7 9 6 )%( stessA no nruteR
Investments to Total A 27 27 54 25 )%(stess
Both the Claims and Expense ratios of the life companies increased significantly over the
period under review. Apart from the rising trend, the ratios are also higher than the Non-Life
ones. The claims ratio of the life companies is particularly high due to the very high
surrender rates.
The outstanding premium ratios of the non-life companies also recorded significant
increases over the period. This emphasizes the increasing significance of credit risk in the
Ghanaian non-life insurance market. The differences between the investments to total
assets ratios of the Life and non-life sectors is directly due to the high outstanding
premiums. A very high percentage of the assets of the Life companies are in investments
simply because life business in on cash basis. Most of the assets of the non-life companies
are in uncollected premiums and hence the very low investment to total asset ratio. (Refer
to the detailed analysis for more information)
National Insurance Commission I 2008 Annual Report
24
Both the Claims and Expense ratios of the Life companies increased significantly over the period under review. Apart from the rising trend, the ratios are also higher than the Non-Life ones. The claims ratio of the Life companies is particularly high due to the very high surrender rates.
The outstanding premium ratios of the Non-life companies also recorded significant increases over the period. This emphasizes the increasing significance of credit risk in the Ghanaian Non-life insurance market. The differences between the investments to total assets ratios of the Life and Non-life sectors are directly due to the high outstanding premiums. A very high percentage of the assets of the Life companies are in investments simply because Life business is on cash basis. Most of the assets of the Non-life companies are in uncollected premiums and hence the very low investment to total asset ratio. (Refer to the detailed analysis for more information)
National Insurance Commission Annual Report 2008 30
69 89 26 46 )%( noitneteR
Investment Income as a % of Investments (%) 10 9 6 11
Investment Income as a % of Premiums (%) 6 6 16 18
x2.1 x8.1 x9.1 ytiuqE ot muimerP ssorG 2.0x
x9.1 x2.1 x0.1 x0.1 ytiuqE ot muimerP teN
x5.2 x3.2 x5.1 x5.1 seitilibaiL ot latipaC
Outstanding premiums as % of Gross Premium (%) 34 43 - -
Outstanding premiums as a % of Total Assets (%) 25 29 - -
Underwriting Profit as a % of Gross Premium (%) 4 2 -16 -16
4 7 9 6 )%( stessA no nruteR
Investments to Total A 27 27 54 25 )%(stess
Both the Claims and Expense ratios of the life companies increased significantly over the
period under review. Apart from the rising trend, the ratios are also higher than the Non-Life
ones. The claims ratio of the life companies is particularly high due to the very high
surrender rates.
The outstanding premium ratios of the non-life companies also recorded significant
increases over the period. This emphasizes the increasing significance of credit risk in the
Ghanaian non-life insurance market. The differences between the investments to total
assets ratios of the Life and non-life sectors is directly due to the high outstanding
premiums. A very high percentage of the assets of the Life companies are in investments
simply because life business in on cash basis. Most of the assets of the non-life companies
are in uncollected premiums and hence the very low investment to total asset ratio. (Refer
to the detailed analysis for more information)
National Insurance Commission I 2008 Annual Report
25
PERFORMANCE INDICATORS LIFE COMPANIES
Claims Ratio:
This ratio measures underwriting profits as a percentage of Gross Premiums. It generally tries to ascertain the portion of the gross premiums that is available to contribute towards profits. It is calculated by dividing the underwriting profit by the gross premiums. Underwriting profits for this purpose is defined as net earned premium minus commissions, claims and management expenses.
Almost all the Life companies made underwriting losses in both 2007 and 2008. This underscores the utmost importance of ensuring the adequacy and efficient management of investments by Life insurance companies. This may also be an indication of under pricing or excessive expenditure by Life companies.
PERFORMANCE INDICATORS
LIFE COMPANIES
Claims Ratio:
This ratio measures underwriting profits as a percentage of Gross Premiums. It generally tries to
ascertain the portion of the gross premiums that is available to contribute towards profits. It is
calculated by dividing the underwriting profit by the gross premiums. Underwriting profits for this
purpose is defined as net earned premium minus commissions, claims and management expenses.
Table 14: CLAIMS RATIO
Company Percentage (%)
2007 2008
No Industry Average 31 36
1 Capital Express Assurance(Ghana) Limited - -
2 CDH Life Assurance Company Limited 68 51
3 Donewell Life Insurance Company Limited - 29
4 Enterprise Life Assurance Company Limited 13 18
5 Ghana Life Insurance Company Limited 77 55
6 Ghana Union Life Assurance Company Limited - 14
7 Glico Life Insurance Company Limited 32 40
17 45 detimiL)anahG( ecnarussA efiL IGI 8
04 33 detimiL anahG ecnarusnI efilteM 9
10 Phoenix Life Assurance Company Limited 10 20
11 Provident Life Assurance Company Limited 19 50
12 Quality Life Assurance Company Limited 16 21
65 15 detimiL ynapmoC ecnarusnI efiL CIS 31
14 StarLife Assurance Company Limited 31 31
15 Unique Life Assurance Company Limited 55 20
16 Vanguard Life Assurance Company Limited 41 53
Almost all the life companies made underwriting losses in both 2007 and 2008. This underscores the
utmost importance of ensuring the adequacy and efficient management of investments by life
insurance companies. This may also be an indication of under pricing or excessive expenditure by life
companies.
National Insurance Commission I 2008 Annual Report
26
Expense Ratio
The Expense ratio is the percentage of total management expenses to gross premiums. The lower the
ratio, the better in terms of management efficiency.
Table 15: EXPENSE RATIO
Company Percentage (%)
2007 2008
No Industry Average 32 40
1 Capital Express Assurance(Ghana) Limited - -
2 CDH Life Assurance Company Limited 44 52
3 Donewell Life Insurance Company Limited - 39
4 Enterprise Life Assurance Company Limited 27 28
5 Ghana Life Insurance Company Limited 35 35
6 Ghana Union Life Assurance Company Limited - 43
7 Glico Life Insurance Company Limited 23 31
632 66 detimiL)anahG( ecnarussA efiL IGI 8
35 16 detimiL anahG ecnarusnI efilteM 9
10 Phoenix Life Assurance Company Limited 49 62
11 Provident Life Assurance Company Limited 19 37
12 Quality Life Assurance Company Limited 12 50
22 91 detimiL ynapmoC ecnarusnI efiL CIS 31
14 StarLife Assurance Company Limited 44 40
15 Unique Life Assurance Company Limited 82 96
16 Vanguard Life Assurance Company Limited 32 25
The industry average rose from 32% in 2007 to 40% in 2008. The ratios of SIC Life, GLICO Life,
Enterprise Life, Provident Life and Quality Life have consistently been below the industry average
during the two-year period under review. However, the ratios of Metropolitan Life, CDH Life, Unique
Life, and Phoenix Life have consistently been above the industry average. The case of IGI Life is that
of low business volumes which are not able to support current overhead expenses.
Expense Ratio
The Expense ratio is the percentage of total management expenses to gross premiums. The lower the ratio, the better in terms of management efficiency.
The industry average rose from 32% in 2007 to 40% in 2008. The ratios of SIC Life, GLICO Life, Enterprise Life, Provident Life and Quality Life have consistently been below the industry average during the two-year period under review. However, the ratios of Metropolitan Life, CDH Life, Unique Life, and Phoenix Life have consistently been above the industry average. The case of IGI Life is that of low business volumes which are not able to support current overhead expenses.
National Insurance Commission I 2008 Annual Report
27
Combined Ratio
This is calculated as Total Claims + Total Management Expenses divided by Gross Premium. It is combination of the claims and management ratios.
The industry average rose from 63% in 2007 to 76% in 2008. However, the ratio of Metropolitan Life is far above the industry average. The ratios of CDH Life, Unique Life and IGI Life are dangerously high.
Combined Ratio
This is calculated as Total Claims + Total Management Expenses divided by Gross Premium. It is
combination of the claims and management ratios.
Table 16: COMBINED RATIO
Company Percentage (%)
2007 2008
No Industry Average 63 76
1 Capital Express Assurance(Ghana) Limited - -
2 CDH Life Assurance Company Limited 112 103
3 Donewell Life Insurance Company Limited - 68
4 Enterprise Life Assurance Company Limited 40 46
5 Ghana Life Insurance Company Limited 112 90
6 Ghana Union Life Assurance Company Limited - 57
7 Glico Life Insurance Company Limited 56 71
703 021 detimiL)anahG( ecnarussA efiL IGI 8
39 39 detimiL anahG ecnarusnI efilteM 9
10 Phoenix Life Assurance Company Limited 59 82
11 Provident Life Assurance Company Limited 38 86
12 Quality Life Assurance Company Limited 28 70
13 SIC Life Insurance Company Limited 70 77
14 StarLife Assurance Company Limited 75 71
15 Unique Life Assurance Company Limited 137 116
16 Vanguard Life Assurance Company Limited 73 79
The industry average rose from 63% in 2007 to 76% in 2008. However, the ratios of Metropolitan
Life is far above the industry average. The ratios of CDH Life, Unique Life and IGI Life are dangerously
high.
National Insurance Commission I 2008 Annual Report
28
Return on Equity Ratio
Return on Equity is the Net Profit after tax as a percentage of Shareholders’ funds (Equity). It measures the profitability of the companies; the higher the percentage, the more profitable the company.
The industry’s average Return on Equity ratio rose positively from 7% in 2007 to 16% in 2008. The ratios of Enterprise Life and Vanguard Life indicate good performance. However, the ratios of Donewell and CDH are as a result of inadequate capitalization than good performance. Metropolitan Life, on the other hand made a huge loss due to high claims ratio and actuarial valuation deficits.
National Insurance Commission Annual Report 2008 34
Return on Equity Ratio
Return on Equity is the Net Profit after tax as a percentage of Shareholders' funds (Equity). It
measures the profitability of the companies; the higher the percentage, the more profitable the
company.
Table 17: RETURN ON EQUITY RATIO
Company Percentage (%)
2007 2008
No Industry Average 7 16
1 Capital Express Assurance(Ghana) Limited - 39
2 CDH Life Assurance Company Limited 1 59
3 Donewell Life Insurance Company Limited - 160
4 Enterprise Life Assurance Company Limited 39 43
5 Ghana Life Insurance Company Limited 173 15
6 Ghana Union Life Assurance Company Limited 1 5
7 Glico Life Insurance Company Limited 43 12
62 21 detimiL)anahG( ecnarussA efiL IGI 8
201- 642- detimiL anahG ecnarusnI efilteM 9
10 Phoenix Life Assurance Company Limited 24 3
11 Provident Life Assurance Company Limited 1 5
12 Quality Life Assurance Company Limited 17 1
01 21 detimiL ynapmoC ecnarusnI efiL CIS 31
14 StarLife Assurance Company Limited 3 26
15 Unique Life Assurance Company Limited 1 16
16 Vanguard Life Assurance Company Limited 28 33
The industry's average Return on Equity ratio rose positively from 7% in 2007 to 16% in 2008. The
ratios of Enterprise Life and Vanguard Life indicate good performance. However, the ratios of
Donewell and CDH are as a result of inadequate capitalization than good performance. Metropolitan
Life, on the other hand made a huge loss due to high claims ratio and actuarial valuation deficits.
National Insurance Commission I 2008 Annual Report
29
Retention Ratio
Retention ratio is a risk management ratio. This ratio measures the percentage of Net Premiums to Gross Premiums. It indicates the portion of the underwritten risks that have not been passed on to reinsurers.
The industry average fell slightly from 98% in 2007 to 96% in 2008. With the exception of Ghana Union Life, all the other companies reinsured less than 10% of their business in 2008. The rather high retention in the Life sector is due to the fact the average sum insured per policy is quite low and hence can be retained. There is however the need to check concentration and aggregation risk.
National Insurance Commission Annual Report 2008 35
Retention Ratio
Retention ratio is a risk management ratio. This ratio measures the percentage of Net Premiums to
Gross Premiums. It indicates the portion of the underwritten risks that have not been passed on to
reinsurers.
Table 18: RETENTION RATIO
Company Percentage (%)
2007 2008
No Industry Average 98 96
1 Capital Express Assurance(Ghana) Limited - -
2 CDH Life Assurance Company Limited 100 80
3 Donewell Life Insurance Company Limited - 100
4 Enterprise Life Assurance Company Limited 98 99
5 Ghana Life Insurance Company Limited 100 100
6 Ghana Union Life Assurance Company Limited - 77
7 Glico Life Insurance Company Limited 100 99
001 001 detimiL)anahG( ecnarussA efiL IGI 8
99 89 detimiL anahG ecnarusnI efilteM 9
10 Phoenix Life Assurance Company Limited 92 91
11 Provident Life Assurance Company Limited 98 100
12 Quality Life Assurance Company Limited 100 99
13 SIC Life Insurance Company Limited 99 100
14 StarLife Assurance Company Limited 100 100
15 Unique Life Assurance Company Limited 99 99
16 Vanguard Life Assurance Company Limited 98 96
The industry average fell slightly from 98% in 2007 to 96% in 2008. With the exception of Ghana
Union Life all the other companies reinsured less than 10% of their business in 2008. The rather high
retention in the Life sector is due to the fact the average sum insured per policy is quite low and
hence can be retained. There is however the need to check concentration and aggregation risk.
National Insurance Commission I 2008 Annual Report
30
Investment Income as a Percentage of Total Investment Ratio
Investment Income as a percentage of Total Investments measures the rate of return on investments. It gives an indication of the quality of the investments made and held by the various companies.
The industry average rose from 6% in 2007 to 11% in 2008. Metropolitan Life, Vanguard Life, Quality Life and Unique Life consistently show good ratios. However, Glico Life, CDH Life and IGI Life show a low ratio and falling trend for the two-year period under review.
Investment Income as a Percentage of Total Investment Ratio
Investment Income as a percentage of Total Investments measures the rate of return on
investments. It gives an indication of the quality of the investments made and held by the various
companies.
Table 19: INVESTMENT INCOME AS A PERCENTAGE OF TOTAL INVESTMENT
Company Percentage (%)
2007 2008
No Industry Average 6 11
1 Capital Express Assurance(Ghana) Limited - -
2 CDH Life Assurance Company Limited 2 2
3 Donewell Life Insurance Company Limited - 11
4 Enterprise Life Assurance Company Limited 7 8
5 Ghana Life Insurance Company Limited 16 11
6 Ghana Union Life Assurance Company Limited 1 17
7 Glico Life Insurance Company Limited 6 6
6 2 detimiL)anahG( ecnarussA efiL IGI 8
82 51 detimiL anahG ecnarusnI efilteM 9
10 Phoenix Life Assurance Company Limited 6 10
11 Provident Life Assurance Company Limited 5 17
12 Quality Life Assurance Company Limited 12 13
9 7 detimiL ynapmoC ecnarusnI efiL CIS 31
14 StarLife Assurance Company Limited 9 9
15 Unique Life Assurance Company Limited 7 16
16 Vanguard Life Assurance Company Limited 9 14
The industry average rose from 6% from 2007 to 11% in 2008. Metropolitan Life, Vanguard Life,
Quality Life and Unique Life consistently show good ratios. However, Glico Life, CDH Life and IGI Life
show a low ratio and falling trend for the two-year period under review.
National Insurance Commission I 2008 Annual Report
31
Investment Income as a Percentage of Premium Ratio
Investment Income as a Percentage of Premium compares a company’s income from investment to its premium income. This ratio measures the extent of support from investment income. It indicates both the quality and adequacy of the investments. This is very relevant considering the fact that Life companies usually make underwriting losses and have to depend on income from investments to make profits.
The industry average rose from 16% in 2007 to 18% in 2008. The ratios of SIC Life, Glico Life, Enterprise Life, Vanguard Life, CDH Life and Phoenix Life are below the industry average. However, the ratios of Metropolitan Life, Provident Life, Quality Life and IGI Life are all above the industry average. The ratios of Unique Life and IGI Life show inadequate premium income.
Investment Income as a Percentage of Premium Ratio
Investment Income as a Percentage of Premium compares a company's income from investment to
its premium income. This ratio measures the extent of support from investment income. It indicates
both the quality and adequacy of the investments. This is very relevant considering the fact, that life
companies usually make underwriting losses and have to depend on income from investments to
make profits.
Table 20: INVESTMENT INCOME AS A PERCENTAGE OF PREMIUM
Company Percentage (%)
2007 2008
No Industry Average 16 18
1 Capital Express Assurance(Ghana) Limited - -
2 CDH Life Assurance Company Limited 10 3
3 Donewell Life Insurance Company Limited - 16
4 Enterprise Life Assurance Company Limited 9 11
5 Ghana Life Insurance Company Limited 27 24
6 Ghana Union Life Assurance Company Limited - 41
7 Glico Life Insurance Company Limited 7 11
95 22 detimiL)anahG( ecnarussA efiL IGI 8
72 23 detimiL anahG ecnarusnI efilteM 9
10 Phoenix Life Assurance Company Limited 10 16
11 Provident Life Assurance Company Limited 23 29
12 Quality Life Assurance Company Limited 26 26
51 01 detimiL ynapmoC ecnarusnI efiL CIS 31
14 StarLife Assurance Company Limited 16 16
15 Unique Life Assurance Company Limited 49 51
16 Vanguard Life Assurance Company Limited 12 16
The industry average rose from 16% in 2007 to 18% in 2008. The ratios of SIC Life, Glico Life,
Enterprise Life, Vanguard Life, CDH Life and Phoenix Life are below the industry average. However,
the ratios of Metropolitan Life, Provident Life, Quality Life and IGI Life are all above the industry
average. The ratios of Unique Life and IGI Life shows inadequate premium income.
National Insurance Commission I 2008 Annual Report
32
Gross Premium to Equity Ratio
The Premium Equity ratios try to assess the capital adequacy of insurance companies. The ratio measures how much capital is available to support the premiums underwritten by a company. An example is, a Gross Premium to Equity ratio of 2.7 means that GH¢1 of capital supports as much as Gh¢2.7 of gross premium.
The industry’s average Gross Premium to Equity ratio rose from 1.2 in 2007 to 2.0 in 2008. The benchmark or industry best practice is however pegged at 2. This means that a ratio significantly above 2 indicates that the company may be overtrading whiles a ratio which is well below 2 means that the company may not be fully utilising its capital. The ratios of SIC life, Starlife, Quality Life, CDH Life, Unique Life, Phoenix Life and IGI Life are below both the industry average and the benchmark. On the other hand, the ratios of StarLife, Vanguard Life and Provident Life are too high. The ratios of Metropolitan Life and Donewell Life are clearly out of range.
Gross Premium to Equity Ratio
The Premium Equity ratios try to assess the capital adequacy of insurance companies. The ratio
measures how much capital is available to support the premiums underwritten by a company. An
example is, a Gross Premium to Equity ratio of 2.7 means that GH¢1 of capital supports as much as
Gh¢2.7 of gross premium.
Table 21: GROSS PREMIUM TO EQUITY RATIO
Company Percentage (%)
2007 2008
No Industry Average 1.2 2.0
1 Capital Express Assurance(Ghana) Limited - -
2 CDH Life Assurance Company Limited 0.2 1.9
3 Donewell Life Insurance Company Limited - 8.4
4 Enterprise Life Assurance Company Limited 1.9 1.8
5 Ghana Life Insurance Company Limited -1.3 1.2
6 Ghana Union Life Assurance Company Limited - 0.6
7 Glico Life Insurance Company Limited 2.5 0.9
1.0 1.0 detimiL)anahG( ecnarussA efiL IGI 8
6.62 7.7 detimiL anahG ecnarusnI efiLteM 9
10 Phoenix Life Assurance Company Limited 1.1 1.3
11 Provident Life Assurance Company Limited 1.1 3.4
12 Quality Life Assurance Company Limited 1.1 1.4
13 SIC Life Insurance Company Limited 0.9 0.9
14 StarLife Assurance Company Limited 0.9 2.9
15 Unique Life Assurance Company Limited 0.3 0.6
16 Vanguard Life Assurance Company Limited 3.0 2.9
The industry's average Gross Premium to Equity ratio rose from 1.2 in 2007 to 2.0 in 2008. The
benchmark or industry best practice is however pegged at 2. This means that a ratio significantly
above 2 indicates that the company may be overtrading whiles a ratio which is well below 2 means
that the company may not be fully utilising its capital. The ratios of SIC life, Starlife, Quality Life,
CDH Life, Unique Life, Phoenix Life and IGI Life are below both the industry average and the
benchmark. On the other hand, the ratios of StarLife, Vanguard Life and Provident Life are too high.
The ratios of Metropolitan Life and Donewell are clearly out of range.
National Insurance Commission I 2008 Annual Report
33
Net Premium to Equity Ratio
The Net Premium to Equity ratio does the same function as the Gross Premium to Equity ratio. The only difference is that the Net Premium to Equity ratio measures the relation of the Net Premium and not the Gross Premium of a company to its capital. The industry average rose from 1.2 in 2007 to 1.9 in 2008.
Net Premium to Equity Ratio
The Net Premium to Equity ratio does the same function as the Gross Premium to Equity ratio. The
only difference is that the Net Premium to Equity ratio measures the relation of the Net Premium
and not the Gross Premium of a company to its capital. The industry average rose from 1.2 in 2007 to
1.9 in 2008.
Table 22: NET PREMIUM TO EQUITY RATIO
Company Percentage (%)
2007 2008
No Industry Average 1.2 1.9
1 Capital Express Assurance(Ghana) Limited - -
2 CDH Life Assurance Company Limited 0.2 1.5
3 Donewell Life Insurance Company Limited - 8.4
4 Enterprise Life Assurance Company Limited 1.9 1.8
5 Ghana Life Insurance Company Limited -1.3 1.2
6 Ghana Union Life Assurance Company Limited - 0.5
7 Glico Life Insurance Company Limited 2.5 0.9
1.0 1.0 detimiL)anahG( ecnarussA efiL IGI 8
3.62 6.7 detimiL anahG ecnarusnI efilteM 9
10 Phoenix Life Assurance Company Limited 1.0 1.1
11 Provident Life Assurance Company Limited 1 3
12 Quality Life Assurance Company Limited 1.1 1.4
13 SIC Life Insurance Company Limited 0.9 0.9
14 StarLife Assurance Company Limited 0.9 2.9
15 Unique Life Assurance Company Limited 0.3 0.6
16 Vanguard Life Assurance Company Limited 2.9 2.8
National Insurance Commission I 2008 Annual Report
34
Capital to Liabilities Ratio
The Capital to Liabilities ratio compares the liabilities of the company to its capital. A capital to liabilities ratio of 2.5 for an example means for every cedi of equity, the company has 2.5 cedis of liabilities.
The industry average capital to liabilities ratio rose from 2.3 in 2007 to 2.5 in 2008. Whereas the ratios of Vanguard Life, Donewell Life, Provident Life and Quality Life show signs of overgearing, MetLife and Donewell Life clearly need additional capital injections.
Capital to Liabilities Ratio
The Capital to Liabilities ratio compares the liabilities of the company to its capital. A capital to
liabilities ratio of 2.5 for an example means for every cedi of equity, the company has 2.5 cedis of
liabilities.
Table 23: CAPITAL TO LIABILITIES RATIO
Company Percentage (%)
2007 2008
No Industry Average 2.3 2.5
1 Capital Express Assurance(Ghana) Limited - 0.0
2 CDH Life Assurance Company Limited 1.1 0.4
3 Donewell Life Insurance Company Limited - 23.2
4 Enterprise Life Assurance Company Limited 1.7 1.7
5 Ghana Life Insurance Company Limited 3.9 2.9
6 Ghana Union Life Assurance Company Limited - 0.7
7 Glico Life Insurance Company Limited 3.3 1.3
4.0 3.0 detimiL)anahG( ecnarussA efiL IGI 8
7.84 1.91 detimiL anahG ecnarusnI efilteM 9
10 Phoenix Life Assurance Company Limited 1.5 1.8
11 Provident Life Assurance Company Limited 5.7 6.8
12 Quality Life Assurance Company Limited 2.4 3.1
13 SIC Life Insurance Company Limited 1.1 0.9
14 StarLife Assurance Company Limited 1.2 5.7
15 Unique Life Assurance Company Limited 0.9 2.7
16 Vanguard Life Assurance Company Limited 4.5 3.6
The industry average capital to liabilities ratio rose from 2.3 in 2007 to 2.5 in 2008. Whereas the
ratios of Vanguard Life, Donewell Life, Provident Life and Quality Life show signs of overgearing,
MetLife and Donewell Life clearly need additional capital injections.
National Insurance Commission I 2008 Annual Report
35
Underwriting Profit as a Percentage of Gross Premiums Ratio
This ratio measures underwriting profits as a percentage of Gross Premiums. It generally tries to ascertain the portion of the gross premiums that is available to contribute towards profits. It is calculated by dividing the underwriting profit by the gross premiums. Underwriting profits for this purpose is defined as net earned premium minus commissions, claims and management expenses
Almost all Life companies made underwriting losses in both 2007 and 2008. This underscores the utmost importance of ensuring the adequacy and efficient management of investments by Life insurance companies. This may also be an indication of underpricing or excessive expenditure by Life companies.
Underwriting Profit as a Percentage of Gross Premiums Ratio
This ratio measures underwriting profits as a percentage of Gross Premiums. It generally tries to
ascertain the portion of the gross premiums that is available to contribute towards profits. It is
calculated by dividing the underwriting profit by the gross premiums. Underwriting profits for this
purpose is defined as net earned premium minus commissions, claims and management expenses
Table 24: UNDERWRITING PROFIT AS A PERCENTAGE OF GROSS PREMUIMS
Company Percentage (%)
2007 2008
No Industry Average -16 -16
1 Capital Express Assurance (Ghana) Limited - -
2 CDH Life Assurance Company Limited -20 -35
3 Donewell Life Insurance Company Limited - -62
4 Enterprise Life Assurance Company Limited -3 0.4
5 Ghana Life Insurance Company Limited -159 -11
6 Ghana Union Life Assurance Company Limited - 3
7 Glico Life Insurance Company Limited 5 2
753- 102- detimi L)anahG( ecnarussA efiL IGI 8
6- 93- detimiL anahG ecnarusnI efilteM 9
10 Phoenix Life Assurance Company Limited -2 -18
11 Provident Life Assurance Company Limited -22 -28
12 Quality Life Assurance Company Limited -10 -27
5- 3- detimiL ynapmoC ecnarusnI efiL CIS 31
14 StarLife Assurance Company Limited -12 -10
15 Unique Life Assurance Company Limited -46 -24
16 Vanguard Life Assurance Company Limited -21 -5
Almost all life companies made underwriting losses in both 2007 and 2008. This underscores the
utmost importance of ensuring the adequacy and efficient management of investments by life
insurance companies. This may also be an indication of underpricing or excessive expenditure by life
companies.
National Insurance Commission I 2008 Annual Report
36
Investment to Total Assets Ratio
Investment to total asset ratio measures the portion of a company’s asset that are in real investments and is therefore readily available to be converted into cash to settle liabilities. In a way, it gives an indication of the quality of the company’s assets. Generally, the Life companies have better ratios than the Non-life mainly because the Life companies do not have the problem of outstanding debtors which deprive them of investible funds.
The industry average for both years are well above 70. The ratios of Metropolitan Life, Donewell Life and Capital Express give clear indications of inadequate investments.
Investment to Total Assets Ratio
Investment to total asset ratio measures the portion of a company's asset that are in real
investments and is therefore readily available to be converted into cash to settle liabilities. In a way it
gives an indication of the quality of the company's assets. Generally, the life companies have better
ratios than the non-life mainly because the life companies do not have the problem of outstanding
debtors which deprive them of investible funds.
Table 25: INVESTMENT TO TOTAL ASSETS
Company Percentage (%)
2007 2008
No Industry Average 72 73
1 Capital Express Assurance(Ghana) Limited - 34
2 CDH Life Assurance Company Limited 73 68
3 Donewell Life Insurance Company Limited - 50
4 Enterprise Life Assurance Company Limited 84 91
5 Ghana Life Insurance Company Limited 76 67
6 Ghana Union Life Assurance Company Limited 84
7 Glico Life Insurance Company Limited 68 76
57 97 detimiL)anahG( ecnarussA efiL IGI 8
25 38 detimiL anahG ecnarusnI efilteM 9
10 Phoenix Life Assurance Company Limited 76 75
11 Provident Life Assurance Company Limited 75 76
12 Quality Life Assurance Company Limited 74 69
13 SIC Life Insurance Company Limited 73 76
14 StarLife Assurance Company Limited 72 83
15 Unique Life Assurance Company Limited 96 76
16 Vanguard Life Assurance Company Limited 72 72
The industry average for both years are well above 70. The ratios of Metropolitan Life, Donewell Life
and Capital Express give clear indications inadequate investments.
National Insurance Commission I 2008 Annual Report
37
Return on Assets Ratio
This ratio measures the return that a company makes on the assets it employs in its operations. It is calculated as the net profit before tax divided by total profits.
The industry average dipped from 7% in 2007 to 4% in 2008. Whereas the ratio of Enterprise Life can be attributed to good performance, the ratios of CDH Life and IGI Life are all due to capital inadequacy.
Return on Assets Ratio
This ratio measures the return that a company makes on the assets it employs in its operations. It is
calculated as the net profit before tax divided by total profits.
Table 26: RETURN ON ASSETS
Company Percentage (%)
2007 2008
No Industry Average 7 4
1 Capital Express Assurance(Ghana) Limited - -
2 CDH Life Assurance Company Limited -1 15
3 Donewell Life Insurance Company Limited - -6
4 Enterprise Life Assurance Company Limited 14 16
5 Ghana Life Insurance Company Limited 60 4
6 Ghana Union Life Assurance Company Limited 1 3
7 Glico Life Insurance Company Limited 10 5
91 01- detimiL)anahG( ecnarussA efiL IGI 8
2- 21- detimiL anahG ecnarusnI efilteM 9
10 Phoenix Life Assurance Company Limited 16 2
11 Provident Life Assurance Company Limited 0 1
12 Quality Life Assurance Company Limited 5 0
5 6 detimiL ynapmoC ecnarusnI efiL CIS 31
14 StarLife Assurance Company Limited 2 4
15 Unique Life Assurance Company Limited 9 -16
16 Vanguard Life Assurance Company Limited -5 7
The industry average dipped from 7% in 2007 to 4% in 2008. Whereas the ratio of Enterprise Life
can be attributed to good performance, the ratios of CDH Life and IGI Life are all due to capital
inadequacy.
National Insurance Commission I 2008 Annual Report
38
Table 27: LIFE INSURANCE INDUSTRY AGGREGATED BALANCE SHEET AS AT 31 DECEMBER, 2008
2008 2007
GH¢ GH¢ Note
Stated Capital 47,915,120.00 38,639,626.00
Capital Surplus 11,594,362.00 3,850,566.00
Income Surplus 2,888,310.00 1,789,922.00
Contingency Reserve 1,819,083.00 1,191,423.00
Shareholders' Funds 64,216,875.00 45,471,537.00
REPRESENTED BY:
Fixed Assets 1 13,782,299.00 11,438,308.00
Investment Properties 12,987,250.00 7,721,773.00
Long Term Investments 2 60,111,845.00 44,724,745.00
86,881,394.00 63,884,826.00
Current Assets
Policy loans 7,650,856.00 5,259,148.00
Other Debtors/Loans 18,217,649.00 9,947,178.00
Amount due from reinsurers - 50,166.00
Taxation 254,269.00 146,869.00
Short term investments 3 71,352,142.00 48,305,545.00
Cash funds/resources 9,279,223.00 7,395,931.00
106,754,139.00 71,104,837.00
Current Liabilities Provision for unearned Premiums 100,066.00 -
Provision for claims 1,051,695.00 730,198.00
Amount due to reinsurers 122,556.00 116,706.00
Bank Overdraft 471,832.00 140,641.00
Creditors 5,212,839.00 4,962,544.00
Taxation 82,474.00 40,537.00
Proposed Dividend 420,217.00 1,258,042.00
7,461,679.00 7,248,668.00
Net Current Asset/Liabilities 99,292,460.00 63,856,169.00
Actuarial Liabilities 119,557,008.00 81,825,752.00
Other Long Term Liabilities 2,399,971.00 443,706.00
121,956,979.00 82,269,458.00
Net Assets/Liabilities 64,216,875.00 45,471,537.00
Life Insurance Industry Aggregated Balance Sheet
National Insurance Commission I 2008 Annual Report
39
NON-LIFE COMPANIES
Table 28: NOTES TO THE LIFE INDUSTRY AGGREGATE BALANCE SHEET
NOTE 1 - FIXED ASSETS 2008 2007
Gh¢ Gh¢
Land & Buildings 6,812,013.00 6,412,045.00
Furniture, Fittings & Equipment 2,355,987.00 1,153,857.00
Motor Vehicles 1,520,836.00 816,854.00
Work in Progress 2,313,370.00 2,580,566.00
Intangibles 39,223.00 3,214.00
Computer Equipment 740,870.00 471,772.00 13,782,299.00 11,438,308.00
NOTE 2 - LONG TERM INVESTMENTS
Quoted Shares 32,452,963.00 16,768,468.00
Unquoted shares 7,251,542.00 13,683,648.00
Government Bonds 4,208,141.00 6,518,273.00
Others 16,050,568.00 7,370,300.00
Corporate Bonds 148,631.00 384,056.00 60,111,845.00 44,724,745.00
NOTE 3 - SHORT TERM INVETSMENTS
Treasury bills 27,390,725.00 21,311,164.00
Fixed Deposits 41,154,207.00 23,221,851.00
Call accounts 51,975.00 -
Unit trusts 1,644,418.00 2,569,948.00
Bonds 1,110,817.00 1,202,582.00 71,352,142.00 48,305,545.00
Table 29: MAKE UP OF ASSETS
2008 2007
GH¢ % GH¢ %
Fixed Assets 13,782,299.00 7.1 11,438,308.00 8.5
Investment Properties 12,987,250.00 6.7 7,721,773.00 5.7
Long Term Investments 60,111,845.00 31.0 44,724,745.00 33.1
Investments in Subsidiaries - 0.0 - 0.0
Policy Loans 7,650,856.00 4.0
5,259,148.00 3.9
Other Debtors 18,217,649.00 9.4 9,947,178.00 7.4
Amount Due from reinsurers - 0.0 50,166.00 0.0
1.0 00.968,641 1.0 00.962,452 noitaxaT
Short term investments 71,352,142.00 36.8
48,305,545.00 35.8
Cash funds/resources 9,279,223.00 4.8 7,395,931.00 5.5
193,635,533.00 100
134,989,663.00 100.0
NON-LIFE COMPANIES
Table 28: NOTES TO THE LIFE INDUSTRY AGGREGATE BALANCE SHEET
NOTE 1 - FIXED ASSETS 2008 2007
Gh¢ Gh¢
Land & Buildings 6,812,013.00 6,412,045.00
Furniture, Fittings & Equipment 2,355,987.00 1,153,857.00
Motor Vehicles 1,520,836.00 816,854.00
Work in Progress 2,313,370.00 2,580,566.00
Intangibles 39,223.00 3,214.00
Computer Equipment 740,870.00 471,772.00 13,782,299.00 11,438,308.00
NOTE 2 - LONG TERM INVESTMENTS
Quoted Shares 32,452,963.00 16,768,468.00
Unquoted shares 7,251,542.00 13,683,648.00
Government Bonds 4,208,141.00 6,518,273.00
Others 16,050,568.00 7,370,300.00
Corporate Bonds 148,631.00 384,056.00 60,111,845.00 44,724,745.00
NOTE 3 - SHORT TERM INVETSMENTS
Treasury bills 27,390,725.00 21,311,164.00
Fixed Deposits 41,154,207.00 23,221,851.00
Call accounts 51,975.00 -
Unit trusts 1,644,418.00 2,569,948.00
Bonds 1,110,817.00 1,202,582.00 71,352,142.00 48,305,545.00
Table 29: MAKE UP OF ASSETS
2008 2007
GH¢ % GH¢ %
Fixed Assets 13,782,299.00 7.1 11,438,308.00 8.5
Investment Properties 12,987,250.00 6.7 7,721,773.00 5.7
Long Term Investments 60,111,845.00 31.0 44,724,745.00 33.1
Investments in Subsidiaries - 0.0 - 0.0
Policy Loans 7,650,856.00 4.0
5,259,148.00 3.9
Other Debtors 18,217,649.00 9.4 9,947,178.00 7.4
Amount Due from reinsurers - 0.0 50,166.00 0.0
1.0 00.968,641 1.0 00.962,452 noitaxaT
Short term investments 71,352,142.00 36.8
48,305,545.00 35.8
Cash funds/resources 9,279,223.00 4.8 7,395,931.00 5.5
193,635,533.00 100
134,989,663.00 100.0
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NON-LIFE COMPANIES
Claims Ratio
The Claims ratio which is the percentage of Claims incurred to Gross Premiums, measures underwriting efficiency. The lower the ratio, the better the underwriting efficiency.
The industry average claims ratio rose from 16% in 2007 to 17% in 2008. Apart from International Energy Insurance and Regency Alliance which are all new companies, the ratios of Phoenix and Glico General are below the industry average for the two-year period under review. Star and CDH recorded significant increases in their claims ratios whiles Phoenix and Global Alliance on the other hand recorded marked increases.
National Insurance Commission Annual Report 2008 46
Claims Ratio The Claims ratio which is the percentage of Claims incurred to Gross Premiums, measures underwriting efficiency. The lower the ratio, the better the underwriting efficiency.
Table 30: CLAIMS RATIO
2007 - 2008
Company Percentage
2007 2008
No Industry Average 16 17
1 CDH Insurance Company Limited 21 12
2 Donewell Insurance Company Limited 12 12
3 Enterprise Insurance Company Limited 17 22
4 Equity Assurance Limited - 18
5 Ghana Union Assurance Company Limited 21 19
6 Glico General Insurance Company Limited 6 5
7 Global Alliance Company Limited 6 50
8 IGI Company Limited 18 11
9 International Energy Insurance company Ltd - 1
10 Metropolitan Insurance Company Limited 15 13
11 Phoenix Insurance Company Limited 8 14
12 Prime Insurance Company Limited 1 12
13 Provident Insurance Company Limited 24 23
14 Quality Insurance Company Limited 19 23
15 Regency Alliance Insurance limited - 11
16 SIC Insurance Company Limited 18 17
17 Star Assurance Company Limited 22 13
18 Unique Insurance Company Limited 16 15
19 Vanguard Assurance Company Limited 12 10
20 Ghana Reinsurance Company Limited 29 23
21 Mainstream Reinsurance Company Limited 27 29
The industry average claims ratio rose from 16% in 2007 to 17% in 2008. Apart from International Energy Insurance and Regency Alliance which are all new companies, the ratios of Phoenix and Glico General are below the industry average for the two-year period under review. Star and CDH recorded significant increases in their claims ratios whiles Phoenix and Global Alliance on the other hand recorded marked increases. Expense Ratio
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Expense Ratio
The Expense ratio measures management expenses as a percentage of Gross Premiums. The lower the ratio, the better in terms of management efficiency.
The industry average rose from 30% in 2007 to 34% in 2008. The ratios of Ghana Union, Metropolitan, Quality, Mainstream, Enterprise and Global Alliance were below the industry average during the two-year period under review. However, the ratios of SIC, Provident, Unique, Donewell and Prime are significantly above the industry average. The ratios of International Energy and Regency Alliance are because they are both new companies and therefore the initial volumes are too low to support the operating expenses.
National Insurance Commission Annual Report 2008 47
The Expense ratio measures management expenses as a percentage of Gross Premiums. The lower the ratio, the better in terms of management efficiency.
Table 31: EXPENSE RATIO
2007 - 2008
Company Percentage
2007 2008
No Industry Average 30 34
1 CDH Insurance Company Limited 32 30
2 Donewell Insurance Company Limited 45 51
3 Enterprise Insurance Company Limited 22 21
4 Equity Assurance Limited - 13
5 Ghana Union Assurance Company Limited 18 15
6 Glico General Insurance Company Limited 26 22
7 Global Alliance Company Limited 17 12
8 IGI Company Limited 57 128
9 International Energy Insurance company Ltd - 169
10 Metropolitan Insurance Company Limited 21 22
11 Phoenix Insurance Company Limited 39 28
12 Prime Insurance Company Limited 95 42
13 Provident Insurance Company Limited 50 57
14 Quality Insurance Company Limited 19 23
15 Regency Alliance Insurance limited - 125
16 SIC Insurance Company Limited 38 40
17 Star Assurance Company Limited 28 25
18 Unique Insurance Company Limited 42 45
19 Vanguard Assurance Company Limited 33 28
20 Ghana Reinsurance Company Limited 19 18
21 Mainstream Reinsurance Company Limited 19 18
The industry average rose from 30% in 2007 to 34% in 2008. The ratios of Ghana Union, Metropolitan, Quality, Mainstream, Enterprise and Global Alliance were below the industry average during the two-year period under review. However, the ratios of SIC, Provident, Unique, Donewell and Prime are significantly above the industry average. The ratios of International Energy and Regency Alliance are because they are both new companies and therefore the initial volumes are too low to support the operating expenses. Combined Ratio
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The is calculated as Total Claims + Total Management Expenses divided by Gross Premium. It is combination of the claims and management ratios.
Table 32: Combined Ratio
2007 - 2008
Company Percentage
2007 2008
No Industry Average 46 51
1 CDH Insurance Company Limited 53 42
2 Donewell Insurance Company Limited 57 63
3 Enterprise Insurance Company Limited 39 43
4 Equity Assurance Limited - 31
5 Ghana Union Assurance Company Limited 39 34
6 Glico General Insurance Company Limited 32 27
7 Global Alliance Company Limited 22 62
8 IGI Company Limited 75 139
9 International Energy Insurance company Ltd - 170
10 Metropolitan Insurance Company Limited 35 35
11 Phoenix Insurance Company Limited 47 42
12 Prime Insurance Company Limited 96 54
13 Provident Insurance Company Limited 73 80
14 Quality Insurance Company Limited 38 46
15 Regency Alliance Insurance limited - 135
16 SIC Insurance Company Limited 55 58
17 Star Assurance Company Limited 50 39
18 Unique Insurance Company Limited 58 60
19 Vanguard Assurance Company Limited 45 38
20 Ghana Reinsurance Company Limited 46 47
21 Mainstream Reinsurance Company Limited 48 41
The industry average rose from 46% in 2007 to 51% in 2008. However, the ratios of SIC, Provident, Unique, Donewell, Global Alliance and Prime are significantly above the industry average.
Combined Ratio
The combined ration is calculated as Total Claims + Total Management Expenses divided by Gross Premium. It is combination of the claims and management ratios.
The industry average rose from 46% in 2007 to 51% in 2008. However, the ratios of SIC, Provident, Unique, Donewell, Global Alliance and Prime are significantly above the industry average.
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Return on Equity Ratio
Return on Equity is the Net Profit after tax as a percentage of Shareholders’ funds (Equity). It measures the profitability of the companies; the higher the percentage, the more profitable the company.
The industry’s average rose from 18% in 2007 to 21% in 2008. The ratios of Ghana Union, Star, MET and Quality recorded the best results with Provident, Donewell and Prime showing the lowest ratios due directly to their rather high expense and combined ratios. As expected, the ratios of all the new companies showed negative results.
National Insurance Commission Annual Report 2008 49
Return on Equity Ratio Return on Equity is the Net Profit after tax as a percentage of Shareholders' funds (Equity). It measures the profitability of the companies; the higher the percentage, the more profitable the company.
Table 33: RETURN ON EQUITY RATIO
2007 - 2008
Company Percentage
2007 2008
No Industry Average 18 21
62 04 detimiL ynapmoC ecnarusnI HDC 1
2 Donewell Insurance Company Limited 19 4
3 Enterprise Insurance Company Limited 16 13
85- - detimiL ecnarussA ytiuqE 4
5 Ghana Union Assurance Company Limited 33 41
6 Glico General Insurance Company Limited 30 31
7 Global Alliance Co 63 3- detimiL ynapm
7-- detimiL ynapmoC IGI 8
9 International Energy Insurance company Ltd - -24
10 Metropolitan Insurance Company Limited 10 34
11 Phoenix Insurance Co 52 31 detimiL ynapm
2 91- detimiL ynapmoC ecnarusnI emirP 21
3 6 detimiL ynapmoC ecnarusnI tnedivorP 31
14 Quality Insurance Co 93 92 detimiL ynapm
43- - detimil ecnarusnI ecnaillA ycnegeR 51
16 SIC Insurance Comp 31 31 detimiL yna
13 61 detimiL ynapmoC ecnarussA ratS 71
12 12 detimiL ynapmoC ecnarusnI euqinU 81
19 Vanguard Assurance Company Limited 26 15
83 82 detimiL ynapmoC ecnarusnieR anahG 02
21 Mainstream Reinsurance Company Limited 9 14
The industry's average rose from 18%in 2007 to 21% in 2008. The ratios of Ghana Union, Star, MET and Quality recorded the best results with Provident, Donewell and Prime showing the lowest ratios due directly to their rather high expense and combined ratios. As expected, the ratios of all the new companies showed negative results.
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Retention Ratio Retention ratio is a risk management ratio. This ratio measures the percentage of Net Premiums to Gross Premiums. It indicates the portion of the underwritten risks that have not been passed on to reinsurers.
Table 34: RETENTION RATIO
2007 - 2008
Company Percentage
2007 2008
No Industry Average 64 62
1 CDH Insurance Company Limited 64 64
2 Donewell Insurance Company Limited 76 76
3 Enterprise Insurance Company Limited 46 44
4 Equity Assurance Limited - 77
5 Ghana Union Assurance Company Limited 41 38
6 Glico General Insurance Company Limited 84 70
7 Global Alliance Company Limited 10 9
8 IGI Company Limited 73 73
9 International Energy Insurance company Ltd - 22
10 Metropolitan Insurance Company Limited 42 49
11 Phoenix Insurance Company Limited 59 56
12 Prime Insurance Company Limited 77 78
13 Provident Insurance Company Limited 79 77
14 Quality Insurance Company Limited 76 79
15 Regency Alliance Insurance limited - 85
16 SIC Insurance Company Limited 68 74
17 Star Assurance Company Limited 69 55
18 Unique Insurance Company Limited 78 75
19 Vanguard Assurance Company Limited 48 44
20 Ghana Reinsurance Company Limited 93 91
21 Mainstream Reinsurance Company Limited 78 71
The industry average fell slightly from 64% in 2007 to 62% in 2008. Whilst the retentions of Enterprise, Ghana Union, Vanguard and Metropolitan are prudently well below the industry average, those for Global Alliance and International Energy appear too low and cause reasonable concern.
Retention Ratio
Retention ratio is a risk management ratio. This ratio measures the percentage of Net Premiums to Gross Premiums. It indicates the portion of the underwritten risks that have not been passed on to reinsurers.
The industry average fell slightly from 64% in 2007 to 62% in 2008. Whilst the retentions of Enterprise, Ghana Union, Vanguard and Metropolitan are prudently well below the industry average, those for Global Alliance and International Energy appear too low and cause reasonable concern.
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Investment Income as a percentage of Total Investments Ratio Investment Income as a percentage of Total Investments measures the rate of return on investments. It gives an indication of the quality of the investments made and held by the various companies. The industry average dipped slightly from 10% 2007 to 9%2008.
Table 35: INVESTMENT INCOME AS A PERCENTAGE OF TOTAL INVESTMENT RATIO
2007 - 2008
Company Percentage
2007 2008
No Industry Average 10 9
1 CDH Insurance Company Limited 9 10
2 Donewell Insurance Company Limited 6 5
3 Enterprise Insurance Company Limited 10 6
4 Equity Assurance Limited - 13
5 Ghana Union Assurance Company Limited 9 8
6 Glico General Insurance Company Limited 10 12
7 Global Alliance Company Limited 0 0
8 IGI Company Limited 2 7
9 International Energy Insurance company Ltd - 8
10 Metropolitan Insurance Company Limited 6 13
11 Phoenix Insurance Company Limited 7 10
12 Prime Insurance Company Limited 31 22
13 Provident Insurance Company Limited 5 6
14 Quality Insurance Company Limited 14 14
15 Regency Alliance Insurance limited - 11
16 SIC Insurance Company Limited 4 5
17 Star Assurance Company Limited 5 9
18 Unique Insurance Company Limited 7 7
19 Vanguard Assurance Company Limited 27 12
20 Ghana Reinsurance Company Limited 9 10
21 Mainstream Reinsurance Company Limited 14 11
Investment Income as a percentage of Total Investments Ratio
Investment Income as a percentage of Total Investments measures the rate of return on investments. It gives an indication of the quality of the investments made and held by the various companies. The industry average dipped slightly from 10% in 2007 to 9% in 2008.
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Investment Income as a percentage of Premiums Investment income as a percentage of Premiums tries to compare a company's income from investment to its premium income. This ratio measures the extent of support from investment income. It indicates both the quality and adequacy of the investments. This is very relevant considering the fact that, most companies make underwriting losses and have to depend on income from investments to make profit.
Table 36: INVESTMENT INCOME AS A PERCENTAGE OF PREMIUMS
2007 - 2008
Company Percentage
2007 2008
No Industry Average 6 6
1 CDH Insurance Company Limited 8 8
2 Donewell Insurance Company Limited 4 1
3 Enterprise Insurance Company Limited 3 6
4 Equity Assurance Limited - 16
5 Ghana Union Assurance Company Limited 19 9
6 Glico General Insurance Company Limited 5 5
7 Global Alliance Company Limited 0 0
8 IGI Company Limited 1 10
9 International Energy Insurance company Ltd - 4
10 Metropolitan Insurance Company Limited 3 7
11 Phoenix Insurance Company Limited 4 4
12 Prime Insurance Company Limited 19 5
13 Provident Insurance Company Limited 5 5
14 Quality Insurance Company Limited 7 7
15 Regency Alliance Insurance limited - 8
16 SIC Insurance Company Limited 3 4
17 Star Assurance Company Limited 5 8
18 Unique Insurance Company Limited 4 4
19 Vanguard Assurance Company Limited 11 4
20 Ghana Reinsurance Company Limited 9 10
21 Mainstream Reinsurance Company Limited 11 9
Investment Income as a percentage of Premiums
Investment income as a percentage of Premiums tries to compare a company’s income from investment to its premium income. This ratio measures the extent of support from investment income. It indicates both the quality and adequacy of the investments. This is very relevant considering the fact that, most companies make underwriting losses and have to depend on income from investments to make profit.
The industry average did not change during the two-year under review. The ratios of SIC, Unique and Phoenix are lower than the industry average. However, the ratio of Donewell is too low and actually shows a falling trend. Global Alliance, for the two years, does not seem to have any investment at all which also means another great concern.
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The industry average did not change during the two-year under review. The ratios of SIC, Unique and Phoenix are lower than the industry average. However, the ratio of Donewell is too low and actually shows a falling trend. Global Alliance for the two years does not seem to have any investment at all which also mean another great concern. Gross Premium to Equity Ratio The Premium Equity ratios try to assess the capital adequacy of insurance companies. The ratios measure how much capital is available to support the premiums underwritten by a company.
Table 36: GROSS PREMIUM TO EQUITY RATIO
2007 - 2008
Company Percentage
2007 2008
No Industry Average 1.9 1.8
1 CDH Insurance Company Limited 1.8 1.9
2 Donewell Insurance Company Limited 5.0 2.5
3 Enterprise Insurance Company Limited 1.6 1.0
4 Equity Assurance Limited - 0.9
5 Ghana Union Assurance Company Limited 2.3 2.2
6 Glico General Insurance Company Limited 2.8 4.3
7 Global Alliance Company Limited 3.3 4.3
8 IGI Company Limited 1 0.5
9 International Energy Insurance company Ltd - 0.3
10 Metropolitan Insurance Company Limited 2.7 2.2
11 Phoenix Insurance Company Limited 2.1 2.9
12 Prime Insurance Company Limited 0.5 1.3
13 Provident Insurance Company Limited 0.6 0.7
14 Quality Insurance Company Limited 2.7 2.4
15 Regency Alliance Insurance limited - 0.4
16 SIC Insurance Company Limited 1.0 0.9
17 Star Assurance Company Limited 2.0 2.2
18 Unique Insurance Company Limited 2.2 2.0
19 Vanguard Assurance Company Limited 2.3 3.0
20 Ghana Reinsurance Company Limited 0.9 0.8
21 Mainstream Reinsurance Company Limited 1.1 1.3
Gross Premium to Equity Ratio
The Premium Equity ratios try to assess the capital adequacy of insurance companies. The ratios measure how much capital is available to support the premiums underwritten by a company.
The industry’s average for the Gross Premium to Equity ratio fell slightly from1.9% in 2007 to 1.8% in 2008. The benchmark or industry best practice is however pegged at 2%. This means that a ratio significantly above 2% indicates that the company may be overtrading whiles a ratio which is well below 2% means that the company is not fully utilising its capital. The ratios of Glico General, Donewell and Global Alliance are higher than both the industry average and the benchmark. On the other hand, the ratios of SIC and Provident are significantly lower than the industry average.
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The industry's average for the Gross Premium to Equity ratio fell slightly from1.9 in 2007 to 1.8 in 2008. The benchmark or industry best practice is however pegged at 2. This means that a ratio significantly above 2 indicates that the company may be overtrading whiles a ratio which is well below 2 means that the company is not fully utilising its capital. The ratios of, Glico General, Donewell and Global Alliance are higher than both the industry average and the benchmark. On the other hand, the ratios of SIC and Provident are significantly lower than the industry average. Net Premium to Equity Ratio The Net Premium to Equity ratio does the same function as the Gross Premium to Equity ratio. The only difference is that the Net Premium to Equity ratio measures the relation of the Net Premium and not the Gross Premium of a company to its capital. The industry average did not change during the two-year under review.
Table 37: NET PREMIUM TO EQUITY RATIO
2007 - 2008
Company Percentage
2007 2008
No Industry Average 1.0 1.0
1 CDH Insurance Company Limited 1.2 1.2
2 Donewell Insurance Company Limited 3.8 1.9
3 Enterprise Insurance Company Limited 0.8 0.4
4 Equity Assurance Limited - 0.7
5 Ghana Union Assurance Company Limited 1.0 0.8
6 Glico General Insurance Company Limited 2.4 3.0
7 Global Alliance Company Limited 0.3 0.4
8 IGI Company Limited 0.7 0.4
9 International Energy Insurance company Ltd - 0.2
10 Metropolitan Insurance Company Limited 1.1 1.1
11 Phoenix Insurance Company Limited 1.2 1.6
12 Prime Insurance Company Limited 0.4 1.0
13 Provident Insurance Company Limited 0.5 0.5
14 Quality Insurance Company Limited 2.0 1.9
15 Regency Alliance Insurance limited - 0.3
16 SIC Insurance Company Limited 0.7 0.7
17 Star Assurance Company Limited 1.4 1.2
18 Unique Insurance Company Limited 1.7 1.5
19 Vanguard Assurance Company Limited 1.1 1.3
20 Ghana Reinsurance Company Limited 0.9 0.8
21 Mainstream Reinsurance Company Limited 0.9 0.9
Net Premium to Equity Ratio
The Net Premium to Equity ratio does the same function as the Gross Premium to Equity ratio. The only difference is that the Net Premium to Equity ratio measures the relation of the Net Premium and not the Gross Premium of a company to its capital. The industry average did not change during the two-year under review.
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Table 38: CAPITAL TO LIABILITIES RATIO
2007 - 2008
Company Percentage
2007 2008
No Industry Average 1.5 1.5
1 CDH Insurance Company Limited 1.1 1.5
2 Donewell Insurance Company Limited 8.3 2.1
3 Enterprise Insurance Company Limited 1.1 0.7
4 Equity Assurance Limited - 0.3
5 Ghana Union Assurance Company Limited 3.2 2.7
6 Glico General Insurance Company Limited 1.8 2.4
7 Global Alliance Company Limited 0.3 0.8
8 IGI Company Limited 0.9 1
9 International Energy Insurance company Ltd - 1.3
10 Metropolitan Insurance Company Limited 1.3 1.3
11 Phoenix Insurance Company Limited 1.6 2.0
12 Prime Insurance Company Limited - 0.2
13 Provident Insurance Company Limited 0.5 0.5
14 Quality Insurance Company Limited 1.9 1.9
15 Regency Alliance Insurance limited 1.7 3.6
16 SIC Insurance Company Limited 0.7 0.8
17 Star Assurance Company Limited 2.4 2.3
18 Unique Insurance Company Limited 2.1 1.7
19 Vanguard Assurance Company Limited 1.2 1.3
20 Ghana Reinsurance Company Limited 0.9 0.8
21 Mainstream Reinsurance Company Limited 1.0 1.2
Capital to Liabilities Ratio
The Capital to Liabilities ratio compares the liabilities of the company to its capital. A capital to liabilities ratio of 1.5 for an example means for every Cedi of equity, the company has 1.5 Cedis of liabilities. The industry average for the two-year period under review remained the same.
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21 Mainstream Reinsurance Company Limited 1.0 1.2
Table 39: OUTSTANDING PREMIUMS AS A PERCENTAGE OF GROSS PREMIUMS
2007 - 2008
Company Percentage
2007 2008
No Industry Average 34 43
1 CDH Insurance Company Limited 19 32
2 Donewell Insurance Company Limited 55 54
3 Enterprise Insurance Company Limited 18 23
4 Equity Assurance Limited - 53
5 Ghana Union Assurance Company Limited 23 23
6 Glico General Insurance Company Limited 23 54
7 Global Alliance Company Limited 12 27
8 IGI Company Limited 32 64
9 International Energy Insurance company Ltd - 43
10 Metropolitan Insurance Company Limited 20 23
11 Phoenix Insurance Company Limited 48 47
12 Prime Insurance Company Limited 44 57
13 Provident Insurance Company Limited 11 14
14 Quality Insurance Company Limited 24 30
15 Regency Alliance Insurance limited - 48
16 SIC Insurance Company Limited 37 57
17 Star Assurance Company Limited 32 32
18 Unique Insurance Company Limited 50 58
19 Vanguard Assurance Company Limited 25 24
20 Ghana Reinsurance Company Limited 72 74
21 Mainstream Reinsurance Company Limited 75 70
The industry average ratio rose sharply from 34% in 2007 to 43% in 2008. The rapid deterioration is adversely affecting the profitability and solvency of insurance companies. This makes the management of credit risk one of the major issues for Ghanaian insurance companies. The ratios of SIC, Unique, Donewell, Phoenix, Prime, Equity and the two reinsurers are dangerously high. Outstanding Premiums as a Percentage of Total Assets
Outstanding Premiums as a Percentage of Gross Premiums
Outstanding Premiums as a percentage of Gross Premiums compares outstanding premiums as at the end of the year to the total premiums written during the year. This efficiency ratio tries to assess how well management makes use of the company’s assets. Specifically, the objective is to find out how long it takes management to collect premium debts and put such funds into use.
The industry average ratio rose sharply from 34% in 2007 to 43% in 2008. The rapid deterioration is adversely affecting the profitability and solvency of insurance companies. This makes the management of credit risk one of the major issues for Ghanaian insurance companies. The ratios of SIC, Unique, Donewell, Phoenix, Prime, Equity and the two reinsurers are dangerously high.
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This ratio measures the outstanding premiums as a percentage of the company's total assets. It is an indication of asset quality. Since trade debtors are not regarded as good quality assets especially where they are quite old, the lower the ratio, the better.
Table 40: OUTSTANDING PREMIUMS AS A PERCENTAGE OF TOTAL ASSETS
2007 - 2008
Company Percentage
2007 2008
No Industry Average 25 29
1 CDH Insurance Company Limited 16 24
2 Donewell Insurance Company Limited 30 43
3 Enterprise Insurance Company Limited 14 13
4 Equity Assurance Limited 0 20
5 Ghana Union Assurance Company Limited 19 18
6 Glico General Insurance Company Limited 24 50
7 Global Alliance Company Limited 14 34
8 IGI Company Limited 51 42
9 International Energy Insurance company Ltd 0 10
10 Metropolitan Insurance Company Limited 24 21
11 Phoenix Insurance Company Limited 38 46
12 Prime Insurance Company Limited 14 42
13 Provident Insurance Company Limited 4 6
14 Quality Insurance Company Limited 22 25
15 Regency Alliance Insurance limited 0 14
16 SIC Insurance Company Limited 21 28
17 Star Assurance Company Limited 19 22
18 Unique Insurance Company Limited 35 43
19 Vanguard Assurance Company Limited 26 31
20 Ghana Reinsurance Company Limited 34 34
21 Mainstream Reinsurance Company Limited 42 41
The industry average moved sharply from 25% in 2007 to 29% in 2008. This sharp movement is a major source of concern. It is generally believed that the intense competition in the industry is fueling this trend but a much more important issue is the need for insurance companies to formulate effective credit policies to help manage credit risk which is fast becoming the most significant risk in the Ghanaian insurance industry. The ratios of Vanguard, Unique, Donewell, Phoenix, Glico General, Global Alliance Prime, Ghana Re and Mainstream are all well above the already too high industry average. It is important to note that the premium debtors used to calculate these ratios are already net of significant provisions for bad and doubtful debts.
Outstanding Premiums as a Percentage of Total Assets
This ratio measures the outstanding premiums as a percentage of the company’s total assets. It is an indication of asset quality. Since trade debtors are not regarded as good quality assets especially where they are quite old, the lower the ratio, the better.
The industry average moved sharply from 25% in 2007 to 29% in 2008. This sharp movement is a major source of concern. It is generally believed that the intense competition in the industry is fueling this trend but a much more important issue is the need for insurance companies to formulate effective credit policies to help manage credit risk which is fast becoming the most significant risk in the Ghanaian insurance industry. The ratios of Vanguard, Unique, Donewell, Phoenix, Glico General, Global Alliance Prime, Ghana Re and Mainstream are all well above the already too high industry average. It is important to note that the premium debtors used to calculate these ratios are already net of significant provisions for bad and doubtful debts.
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Return on Assets Return on Asset is defined as the Net Profit After Tax as a percentage of Total Assets. It is an efficiency ratio which measures how efficiently the company make use of the assets under its control to generate returns for the policyholders and shareholders.
Table 41: RETURN ON ASSETS RATIO
2007 - 2008
Company Percentage
2007 2008
No Industry Average 6 9
1 CDH Insurance Company Limited 23 10
2 Donewell Insurance Company Limited -1 13
3 Enterprise Insurance Company Limited 7 8
4 Equity Assurance Limited 0 -25
5 Ghana Union Assurance Company Limited 7 11
6 Glico General Insurance Company Limited 11 7
7 Global Alliance Company Limited 1 11
8 IGI Company Limited
9 International Energy Insurance company Ltd 0 -21
10 Metropolitan Insurance Company Limited 4 15
11 Phoenix Insurance Company Limited 13 8
12 Prime Insurance Company Limited -15 1
13 Provident Insurance Company Limited 4 2
14 Quality Insurance Company Limited 10 14
15 Regency Alliance Insurance limited 0 -26
16 SIC Insurance Company Limited 7 7
17 Star Assurance Company Limited 5 9
18 Unique Insurance Company Limited 7 8
19 Vanguard Assurance Company Limited 12 6
20 Ghana Reinsurance Company Limited
21 Mainstream Reinsurance Company Limited 5 6
Even though the industry average rose from 6% in 2007 to 9% in 2008, Vanguard, Provident, CDH and Phoenix recorded significant dips in their ratios. The ratios of the new companies is indicative of their status as new entrants.
Return on Assets
Return on Asset is defined as the Net Profit After Tax as a percentage of Total Assets. It is an efficiency ratio which measures how efficiently the company make use of the assets under its control to generate returns for the policyholders and shareholders.
Even though the industry average rose from 6% in 2007 to 9% in 2008, Vanguard, Provident, CDH and Phoenix recorded significant dips in their ratios. The ratios of the new companies is indicative of their status as new entrants.
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Investment to Total Assets Ratio This is an asset adequacy/quality ratio. It is intended to ascertain the percentage of the company's total assets that are in the form real investments that can be easily converted into cash to take care of policyholder and other liabilities.
Table 42: INVESTMENT TO TOTAL ASSETS RATIO
2007 - 2008
Company Percentage
2007 2008
No Industry Average 52 45
1 CDH Insurance Company Limited 74 68
2 Donewell Insurance Company Limited 17 21
3 Enterprise Insurance Company Limited 72 60
4 Equity Assurance Limited 0 49
5 Ghana Union Assurance Company Limited 74 77
6 Glico General Insurance Company Limited 57 43
7 Global Alliance Company Limited 47 45
8 IGI Company Limited 53 51
9 International Energy Insurance company Ltd 0 15
10 Metropolitan Insurance Company Limited 57 66
11 Phoenix Insurance Company Limited 52 66
12 Prime Insurance Company Limited 25 19
13 Provident Insurance Company Limited 42 39
14 Quality Insurance Company Limited 48 40
15 Regency Alliance Insurance limited 0 46
16 SIC Insurance Company Limited 54 42
17 Star Assurance Company Limited 58 58
18 Unique Insurance Company Limited 45 45
19 Vanguard Assurance Company Limited 56 51
20 Ghana Reinsurance Company Limited 59 41
21 Mainstream Reinsurance Company Limited 48 53
The industry average fell significantly from 52% in 2007 to 45% in 2008. This is mainly due to the ever rising premium debtors; that is, the inability of insurance companies to collect their premiums and put them in gainful investments. The ratios of Ghana Union, Enterprise, CDH and Metropolitan
Investment to Total Assets Ratio
This is an asset adequacy/quality ratio. It is intended to ascertain the percentage of the company’s total assets that are in the form real investments that can be easily converted into cash to take care of policyholder and other liabilities.
The industry average fell significantly from 52% in 2007 to 45% in 2008. This is mainly due to the ever rising premium debtors; that is, the inability of insurance companies to collect their premiums and put them in gainful investments. The ratios of Ghana Union, Enterprise, CDH and Metropolitan look quite good. The ratios of Donewell, Prime, Provident, International Energy, Quality and Ghana Re on the other hand are too low.
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look quite good. The ratios of Donewell, Prime, Provident, International Energy, Quality and Ghana Re on the other hand are too low. Underwriting profits as a Percentage of Gross Premiums This ratio measures underwriting profits as a percentage of Gross Premiums. It generally tries to ascertain the portion of the gross premiums that is available to contribute towards profits. It is calculated by dividing the underwriting profit by the gross premiums. Underwriting profits for this purpose is defined as net earned premium minus commissions, claims and management expenses. The industry average dipped from 4% in 2007 to 2% in 2008. It is important to note that the ratios of the new companies were excluded from the average to avoid distortions.
Table 43: UNDERWRITING PROFITS AS A PERCENTAGE OF GROSS RATIO
2007 - 2008
Company Percentage
2007 2008
No Industry Average 4 2
1 CDH Insurance Company Limited 5 10
2 Donewell Insurance Company Limited 2 -1
3 Enterprise Insurance Company Limited 5 0.04
4 Equity Assurance Limited -58 -4
5 Ghana Union Assurance Company Limited 6 3
6 Glico General Insurance Company Limited 12 6
7 Global Alliance Company Limited 1 3
8 IGI Company Limited -5 -41
9 International Energy Insurance company Ltd -10 -4
10 Metropolitan Insurance Company Limited 2 7
11 Phoenix Insurance Company Limited 8 6
12 Prime Insurance Company Limited 9 4
13 Provident Insurance Company Limited -2 -5
14 Quality Insurance Company Limited 8 13
15 Regency Alliance Insurance limited - -133
16 SIC Insurance Company Limited 11 14
17 Star Assurance Company Limited 5 9
18 Unique Insurance Company Limited 10 11
19 Vanguard Assurance Company Limited 2 1
20 Ghana Reinsurance Company Limited - -82
21 Mainstream Reinsurance Company Limited - -97
Underwriting profits as a Percentage of Gross Premiums
This ratio measures underwriting profits as a percentage of Gross Premiums. It generally tries to ascertain the portion of the gross premiums that is available to contribute towards profits. It is calculated by dividing the underwriting profit by the gross premiums. Underwriting profits for this purpose is defined as net earned premium minus commissions, claims and management expenses. The industry average dipped from 4% in 2007 to 2% in 2008. It is important to note that the ratios of the new companies were excluded from the average to avoid distortions.
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Table 44: NON-LIFE INSURANCE INDUSTRY AGGREGATED BALANCE SHEET AS AT 31 DECEMBER, 2008
2008 2007
GH¢ GH¢ Note
Stated Capital 46,317,424.00 38,311,558.00
Capital Surplus 55,247,610.00 43,202,339.00
Income Surplus 38,050,699.00 8,822,912.00
Contingency Reserve 61,716,952.00 40,691,248.00
Shareholders' Funds 201,332,685.00 131,028,057.00
REPRESENTED BY:
Fixed Assets 1 46,177,173.00 35,699,918.00
Investment Properties 15,715,282.00 11,509,493.00
Long Term Investments 2 57,791,245.00 41,651,929.00
Investments in Subsidiaries 10,294,855.00 10,552,922.00 129,978,555.00 99,414,262.00
Current Assets
Outstanding Premiums 114,312,497.00 71,105,286.00
Other Debtors/Loans 26,702,297.00 11,989,367.00
Amount due from reinsurers 9,709,191.00 3,569,723.00
Taxation 530,078.00 444,748.00
Short term investments 3 100,265,957.00 80,503,837.00
Cash funds/resources 24,000,061.00 19,274,054.00 275,520,081.00 186,887,015.00
Current Liabilities Provision for unearned Premiums 65,275,999.00 52,912,139.00
Provision for claims 27,681,217.00 22,770,141.00
Amount due to reinsurers 66,157,713.00 44,211,536.00
Bank Overdraft 933,734.00 254,514.00
Creditors 28,000,057.00 14,589,895.00
Taxation 8,216,689.00 2,764,862.00
Proposed Dividend 2,890,249.00 4,767,112.00 199,155,658.00 142,270,199.00
Net Current Asset/Liabilities 76,364,423.00 44,616,816.00
Other Long Term Liabilities 5,010,293.00 13,003,021.00
Net Assets/Liabilities
201,332,685.00
131,028,057.00
National Insurance Commission I 2008 Annual Report
56
National Insurance Commission Annual Report 2008 62
CONCLUSION
2008 marked the heightening of the global financial crises. This brought to the fore the
importance of regulation and supervision in the financial sector.
As we move forward, the National Insurance Commission should devote more resources to
on-site inspection and the adherence of our industry to the core principles of the
International Association of insurance Supervisors (IAIS).
It is also important that the industry build capacity for the insurance on oil and gas as Ghana
gets ready for the exploration of oil at Cape Three Points in offshore fields.
Public education must also be continued to create more awareness among the public.
Table 46: MAKE UP OF ASSETS
2008 2007
GH¢ % GH¢ %
Fixed Assets 46,177,173.00 11.4 35,699,918.00 12.5
Investment Properties 15,715,282.00 3.9 11,509,493.00 4.0
Long Term Investments 57,791,245.00 14.3 41,651,929.00 14.5
Investments in Subsidiaries
10,294,855.00 2.5 10,552,922.00 3.7
Outstanding Premiums 114,312,497.00 28.2 71,105,286.00 24.8
Other Debtors 26,702,297.00 6.6 11,989,367.00 4.2
Amount Due from reinsurers 9,709,191.00 2.4 3,569,723.00 1.2
Taxation 530,078.00 0.1
444,748.00 0.2
Short term investments
100,265,957.00 24.7
80,503,837.00 28.1
Cash funds/resources
24,000,061.00 5.9 19,274,054.00 6.7
405,498,636.00
100 286,301,277.00
100
National Insurance Commission Annual Report 2008 62
CONCLUSION
2008 marked the heightening of the global financial crises. This brought to the fore the
importance of regulation and supervision in the financial sector.
Table 45: NOTES TO THE NON-LIFE INDUSTRY AGGREGATE BALANCE SHEET
NOTE 1 - FIXED ASSETS 2008 2007 GH¢ GH¢
Land & Buildings 36,406,877.00 28,492,515.00
Furniture, Fittings & Equipment 3,277,664.00 2,887,853.00
Motor Vehicles 2,358,466.00 1,206,915.00
Work in Progress 2,134,492.00 1,854,158.00
Intangibles 562,478.00 -
Computer Equipment 1,437,196.00 1,258,477.00 46,177,173.00 35,699,918.00
NOTE 2 - LONG TERM INVESTMENTS
Quoted Shares 44,895,477.00 28,859,340.00
Unquoted shares 8,924,232.00 8,394,002.00
Government Bonds 1,477,392.00 1,773,718.00
Others 1,068,818.00 989,543.00
Corporate Bonds 1,425,326.00 1,635,326.00 57,791,245.00 41,651,929.00
NOTE 3 - SHORT TERM INVETSMENTS
Treasury bills 48,353,329.00 38,760,010.00
Fixed Deposits 48,290,786.00 40,220,875.00
Call accounts 1,600,973.00 131,562.00
Unit trusts 70,000.00 -
Bonds 1,950,869.00 1,391,390.00 100,265,957.00 80,503,837.00
National Insurance Commission I 2008 Annual Report
57
CONCLUSION
2008 marked the heightening of the global financial crises. This brought to the fore the importance of regulation and supervision in the financial sector.
As we move forward, the National Insurance Commission should devote more resources to on-site inspection and the adherence of our industry to the core principles of the International Association of Insurance Supervisors (IAIS).
It is also important that the industry builds capacity for the insurance of oil and gas as Ghana gets ready for the exploration of oil at Cape Three Points in offshore fields.
Public education must also be continued to create more awareness among the public.
National Insurance Commission I 2008 Annual Report
58
APPENDICES
1. Corporate Information 2. 2007 Financial Reports3. Solvency Guidelines 4. List of Registered Insurance Companies 5. List of Registered Reinsurance Companies 6. List of Registered Insurance Broking Companies7. List of Registered Loss Adjusting Companies8. List of Registered Reinsurance Broking Companies
National Insurance Commission I 2008 Annual Report
59
CORPORATE INFORMATION
Board of Directors:
Lt. Gen. Joseph Henry Smith Chairman
Ms. Josephine J. Amoah Commissioner of Insurance
Mr. William F. Duncan
Col. John Armah Okai
Mrs. Evelyn Pra-Gohoho
Mr. Wilfred Sam-Awortwi
Dr. D. N. Tapang
Mr. Wilson Q. Tei
Mr. Enoch H. Cobbinah
Mr. Stephen Kobla Okudzeto
Secretary: Mr. Ernest Frimpong
Management Team:
Ms. Josephine J. Amoah Commissioner of Insurance
Mrs. Nyamikeh Kyiamah Deputy Commissioner of Insurance
Mrs. Emma Araba Ocran Legal Director
Mr. Michael Kofi Andoh Head, Supervision
Mr. Joseph Bentor Head,Finance & Administration
Mr. Isaac Buabeng Head, Marketing, Research & External Relations
Mr. Martin D. Abayateye Internal Auditor
Auditors: Osei Kwabena & Associates
(Chartered Accountants)
71 Palace Street, B. 603/18
North Kaneshie
P. O. Box 10276
Accra-North
Bankers:SG-SSB Bank (Ghana) Lim-ited
Merchant Bank (Ghana) Limited
Cal Bank (Ghana) Limited
Ghana Commercial Bank
National Insurance Commission I 2008 Annual Report
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National Insurance Commission Annual Report 2008 66
FINANCIAL STATEMENTS FOR THE YEAR ENDED DECEMBER 31, 2008
REPORT OF THE DIRECTORS The Directors submit their report together with the audited Financial Statement of National Insurance Commission for the year ended 31 December 2008.
Statement of Directors responsibilities The Directors are responsible for the preparation of Financial Statements for each financial year which give a true and fair view of the state of affairs of the Commission and of the Profit or Loss and Cash Flow for that period. In preparing these Financial Statements, the Directors have selected suitable accounting policies and then applied them consistently, made judgments and estimates that are reasonable and prudent and followed Ghana Accounting Standards. The Directors are responsible for ensuring that the Commission keeps proper accounting records that disclose with reasonable accuracy at any time the financial position of the Commission. The Directors are also responsible for safeguarding the assets of the Commission and taking reasonable steps for the prevention and detection of fraud and other irregularities. Principal Activities The principal activity of the Commission is to regulate the activities of the Insurance Companies in Ghana. Financial Results The Financial results of the Commission are as summarized below:
2008
(GH¢)
2007
(GH¢)
028,740,3 emocnI 2,140,460
)365,696,2( erutidnepxE (2,088,823)
752,153 erutidnepxE revo emocnI fo ssecxE 51,637
To which is added to the balance brought forward on the Accumulated Fund
1,840,815
1,789,178
Giving a balance carried forward on the Accumulated Fund of 2,192,072 1,840,815
FINANCIAL STATEMENTS FOR THE YEAR ENDED
DECEMBER 31, 2008
REPORT OF THE DIRECTORS
The Directors submit their report together with the audited Financial Statement of National Insurance Commission for the year ended 31 December 2008.
Statement of Directors responsibilities
The Directors are responsible for the preparation of Financial Statements for each financial year which give a true and fair view of the state of affairs of the Commission and of the Profit or Loss and Cash Flow for that period. In preparing these Financial Statements, the Directors have selected suitable accounting policies and then applied them consistently, made judgments and estimates that are reasonable and prudent and followed Ghana Accounting Standards.
The Directors are responsible for ensuring that the Commission keeps proper accounting records that disclose with reasonable accuracy at any time the financial position of the Commission. The Directors are also responsible for safeguarding the assets of the Commission and taking reasonable steps for the prevention and detection of fraud and other irregularities.
Principal Activities
The principal activity of the Commission is to regulate the activities of the Insurance Companies in Ghana.
Financial Results
The Financial results of the Commission are as summarized below:
BY ORDER OF THE BOARD
DIRECTORS
OCTOBER, 2009
National Insurance Commission I 2008 Annual Report
61
REPORT OF THE AUDITORS TO THE MEMBERS OF
NATIONAL INSURANCE COMMISSION
We have audited the Financial Statements of National Insurance Commission for the year ended 31 December 2007 set out on pages 61 to 72
Respective Responsibilities of Directors and Auditors
As stated on page 60 the Directors are responsible for the preparation of the Financial Statements. Our responsibility is to express an independent opinion on these Financial Statements based on our audit.
Basis of Opinion
We conducted our audit in accordance with International Standards on Auditing. Those Standards require that we plan and perform our audit to obtain reasonable assurance about whether the Financial Statements are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the Financial Statements. An audit also includes assessing the accounting principles used and significant estimates made by the Directors, as well as evaluating the overall presentation of the Financial Statements.
We have obtained all the information and explanations which to the best of our knowledge and belief were necessary for the purpose of our audit.
Opinion
In our opinion, proper books of account have been kept and the Financial Statements which are in agreement therewith give a true and fair view of the state of the affairs of the Commission as at 31st December, 2008 and of its excess of income over expenditure and cashflows for the year then ended in accordance with Ghana Accounting Standards and comply with the rules of the Commission.
OSEI KWABENA & ASSOCIATES(CHARTEDRED ACCOUNTANTS)
APRIL, 2009
National Insurance Commission I 2008 Annual Report
62
National Insurance Commission Annual Report 2008 68
April, 2009
NATIONAL INSURANCE COMMISSION INCOME AND EXPENDITURE ACCOUNT FOR THE YEAR ENDED
31 DECEMBER, 2008
setoN 2008(GH¢)
2007(GH¢)
064,041,2 028,740,3 1 EMOCNI
)328,880,2( )365,696,2( 2 ERUTIDNEPXE
736,15 752,153 erutidnepxE revo emocnI fo ssecxE
DNUF DETALUMUCCA
871,987,1 518,048,1 yraunaJ 1 ta sa ecnalaB
736,15 752,153 raey rof erutidnepxE revo emocnI fo ssecxE
518,048,1 270,291,2 rebmeceD 13 ta sa ecnalaB
The accounting polices and notes on pages …… to ….. form an integral part of these
Financial Statements.
NATIONAL INSURANCE COMMISSION
INCOME AND EXPENDITURE ACCOUNT FOR THE
YEAR ENDED 31 DECEMBER, 2008
The accounting polices and notes on pages 65 to 72 form an integral part of these Financial Statements.
National Insurance Commission I 2008 Annual Report
63
Notes 2008(GH¢)
2007(GH¢)
Non-Current Assets
808,380,1 569,200,1 3 tnempiuqE & stnalP ,ytreporP
000,04 000,04 21 CIG ni serahS ytiuqE
1,042,965 1,123,808
Current Assets
497,584 905,117 5 stnemtsevnI mreT trohS
626,696 772,026 6 elbavieceR stnuoccA
985,711 996,383 secnalaB hsaC dna knaB
900,003,1 584,517,1
Current Liabilities
260,66 944,77 7 slaurccA dna elbayaP stnuoccA
260,66 944,77
Net Current Assets 1,638,036 1,233,947
Non-Current Liabilities
575,2 - 9 naoL mreT gnoL
575,2 -
Net Assets 2,681,001 2,355,180
Represented by:
518,048,1 270,291,2 dnuF detalumuccA
463,874 929,254 b8 tnarG derrefeD
000,63 000,63 31 )CIG( tneR derrefeD
2,681,001 2,355,179
NATIONAL INSURANCE COMMISSION
BALANCE SHEET AS AT 31 DECEMBER, 2008
The Financial Statements on pages 62 to 72 were approved by the Board of Directors on 29th October, 2009 and were signed on its behalf by:
The accounting polices and notes on pages 65 to 72 form an integral part of these Financial Statements.
National Insurance Commission I 2008 Annual Report
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National Insurance Commission Annual Report 2008 70
The accounting polices and notes on pages …. to ….. form an integral part of these Financial Statements.
NATIONAL INSURANCE COMMISSION CASHFLOW STATEMENT FOR THE YEAR ENDED
31 DECEMBER, 2008
Notes 2008 (GH¢) 2007
(GH¢)Operating Activities
193,422 728,264 01 snoitarepO morf detareneG hsaC
608,1 466,1 1 devieceR tseretnI
Net Cash Generated form Operating Activities 464,491 226,197
Cashflow from Investing Activities
Purchase of Property, Plant and Equipment 3 (79,408) (182,327)
658,4 995,01 4 elciheV rotoM fo elaS eht morf deecorP
)842,861( )517,522( tnemtsevnI fo esahcruP
893,05 817,89 1 devieceR emocnI tnemtsevnI
Net Cash used Investing Activities (195,806) (295,321)
Cash Flows from Financing Activities
- )575,2( tnemyapeR naoL
Net Cash Generated from / (used in) financing activities (2,575) -
Net increase/ (decrease) in Cash and Cash Equivalents 266,110 (69,124)
Movement in Cash and Cash Equivalents
317,681 985,711 raeY eht fo tratS tA
Increase/(Decrease) in Cash and Cash Equivalents 266,110 (69,124)
996,383 raeY eht fo dne tA 117,589
NATIONAL INSURANCE COMMISSION
CASHFLOW STATEMENT FOR THE YEAR ENDED 31
DECEMBER, 2008
National Insurance Commission I 2008 Annual Report
65
ACCOUNTING POLICIES
a. Basis of Accounting
The Financial Statements have been prepared under the historical cost convention as modified by accrual basis and comply with Ghana Accounting Standards.
b. Property, Plant and Equipment and Depreciation
All properties and equipments are recorded at cost less depreciation. Depreciation is calculated to write off the cost of each asset on a straight-line basis at the following annual rates.
Furniture and Fittings 10 % Motor Vehicles 20 % Office Equipment 20 % Office Biulding 3 % Residential Accommodation 20 % Computers 33.33 %
Disposals of properties and equipments are accounted for by comparing the net book value with the proceeds. The resulting profit or loss on disposal is credited or charged to the Income and Expenditure Account. Depreciation method, residual values and useful life are re-assessed at the end of each financial year.
c. Grants
Grants relating to the purchase of property and equipment are included in non-current liabilities as deferred income and are credited to the income statement on a straight- line basis over the expected lives of the related assets.
d. Cash and Cash Equivalents
For the purposes of the Cashflow Statement, cash and cash equivalents comprise cash on hand and short-term liquid investments.
e. Investment securities are in the form of Treasury Bills, Fixed Deposits and Non- Negotiable Certificates of deposits. Investments are quoted at cost.
f. Accounts Receivable Accounts receivable are stated at net of bad and doubtful debts.
g. Translation of Foreign Currencies
Translations in foreign currencies during the year are converted into cedis at rates prevailing at the time of transaction. Monetary assets and liabilities denominated in foreign currencies at the balance sheet date are translated into cedis at the exchange rate ruling on that date. Gains and losses resulting from the conversion and translation are dealt with in the Income and Expenditure Account in the year in which they arise.
National Insurance Commission I 2008 Annual Report
66
Notes 2008
(GH¢)
2007(GH¢)
Levies on Insurers 1,879,082 1,248,526
Levies on Brokers 89,186 61,558
Licensing/Renewal Income 120,315 30,123
Investment Income 98,718 50,398
Interest on Current Account 1,663 1,806
Motor Contribution 575,304 508,728
Grant Income 8a 80,145 51,840
Deferred Grant Income 8b 25,435 25,435
Rent Income/Fees - IITC 143,206 128,315
Other Income 34,766 33,731
3,047,820 2,140,460
Other Income is made up of the following:
Notes 2008 (GH¢)
2007
(GH¢)
Year Book Sales 3,335 3,452
Gain on Sale of Assets 7,066 4,856
Insurance Supervisor’s Adverts - 150
Interest on Loans 6,273 5,136
Insurance Claims 11,092 -
Product Filing Fees 7,000 20,137
34,766 33,731
NATIONAL INSURANCE COMMISSION
NOTES TO THE FINANCIAL STATEMENTS FOR THE
YEAR ENDED 31 DECEMBER, 2008
1. INCOME: GH¢ 3,047,820
This is made up as follows:
National Insurance Commission I 2008 Annual Report
67
NATIONAL INSURANCE COMMISSION
NOTES TO THE FINANCIAL STATEMENTS FOR THE
YEAR ENDED 31 DECEMBER, 2008
2. EXPENDITURE: GH¢ 2,696,563
Expenditure includes:
The average number of persons employed by the Commission during the year was 60 (2007:51)
National Insurance Commission Annual Report 2008 73
NATIONAL INSURANCE COMMISSION NOTES TO THE FINANCIAL STATEMENTS FOR THE YEAR ENDED
31 DECEMBER, 2008 2. EXPENDITURE: GH¢ 2,696,563
Expenditure includes:
Notes 2008 (GH¢)
2007
(GH¢)
083,958 628,431,1 tsoC ffatS
824,4 026,6 noitarenumeR ’srotiduA
314,033 741,514 stnemulomE ’srotceriD
239,461 617,6513 noitaicerpeD
021,44 868,25 tsoC rekcitS
The average number of persons employed by the Commission during the year was 60 (2007:51)
National Insurance Commission I 2008 Annual Report
68
Office
Bu
ildin
g Fu
rnit
ure
and
Fitti
ngs
Mot
or Veh
icle
s Office
Eq
uipm
ent
Compu
ters
Re
side
ntial
Fu
rnis
hing
To
tal
G
H¢
G
H¢
G
H¢
G
H¢
G
H¢
G
H¢
G
H¢
Cost
At
1st
Janu
ary
2008
(A)
823,
450
162,
113
392,
933
133,
583
50,3
43
73,5
84
1,63
6,00
6
Add
ition
s -
3,
426
- 34
,174
27
,101
14
,707
79
,408
Dis
posa
ls -
- -
(3
88)
(13,
329)
-
(13,
717)
At 3
1st D
ecem
ber
2008
82
3,45
0 16
5,53
9 39
2,93
3 16
7,36
9 64
,115
88
,291
1,
701,
697
Dep
reciati
on
At 1
st Ja
nuar
y 20
08
130,
929
70,6
22
175,
570
115,
468
36,2
03
23,4
08
552,
200
Char
ge fo
r th
e Ye
ar
24,7
04
15,3
70
69,2
14
14,1
22
15,6
48
17,6
58
156,
716
Dis
posa
ls -
- -
(3
10)
(9,8
74)
- (1
0,18
4)
15
5,63
3 85
,992
24
4,78
4 12
9,28
0 41
,977
41
,066
69
8,73
2
Net
Boo
k V
alue
At 3
1st D
ecem
ber
2008
66
7,81
7 79
,547
14
8,14
9 38
,089
22
,138
47
,225
1,
002,
965
At 3
1st D
ecem
ber
2007
69
2,52
2 91
,492
21
7,36
2 18
,115
14
,140
50
,175
1,
083,
806
Cost
–Fu
lly Dep
reci
ated
Asset
s (B
) -
3,42
6 -
388
13,3
29
- 17
,143
DEP
RECI
ABL
E V
ALU
E (A
-B)
823,
450
162,
113
392,
933
166,
981
50,7
86
88,2
91
1,68
4,55
4
3.
PR
OP
ER
TY, P
LA
NT
AN
D E
QU
IPM
EN
T
National Insurance Commission I 2008 Annual Report
69National Insurance Commission
Annual Report 2008 75
4. GAIN ON DISPOSAL OF ASSETS This is made up as follows:
2008
(GH¢)
2007(GH¢)
Cost 13,717 223,882 Accumulated Depreciation (10,184) (223,882) Net Book Value 3,533 - Proceeds 10,599 4,856 Gain/(Loss) on Disposal 7,066 4,856
5. SHORT TERM INVESTMENTS: GH¢711,509
This is made up as follows:
2008
(GH¢)
2007(GH¢)
Treasury Bills 268,198 237,396 Fixed Deposits 381,154 191,976 Non-negotiable Certificate of Deposit 62,157 56,422 711,509 485,794
Purchase of Investments (Additions during the year) 225,715 168,248
Treasury Bills are debt securities issued by the Bank of Ghana for a term of three months, six months or a year and are classified as available for sale investments. Bills are carried at cost.
6. ACCOUNT RECIEVABLES AND PREPAYMENT: GH¢ 620,277
This is made up as follows:
2008
(GH¢)
2007(GH¢)
Levies Due from Insurers and Brokers 90,004 203,581 IITC Debtors 3,416 32,442 Staff Advances 355,959 325,118
Sundry Debtors 28,046 58,986 Accrued Investments Income 40,146 12,523
Withholding Tax Credit 6,293 5,571
Receivable from Provident Fund 11,144 -
Prepaid Insurance Expense 23,751 14,980
Compensation Fund 16,047 -
VA 45,471 36,791
Others 6,634
620,277 696,626
National Insurance Commission Annual Report 2008 75
4. GAIN ON DISPOSAL OF ASSETS This is made up as follows:
2008
(GH¢)
2007(GH¢)
Cost 13,717 223,882 Accumulated Depreciation (10,184) (223,882) Net Book Value 3,533 - Proceeds 10,599 4,856 Gain/(Loss) on Disposal 7,066 4,856
5. SHORT TERM INVESTMENTS: GH¢711,509
This is made up as follows:
2008
(GH¢)
2007(GH¢)
Treasury Bills 268,198 237,396 Fixed Deposits 381,154 191,976 Non-negotiable Certificate of Deposit 62,157 56,422 711,509 485,794
Purchase of Investments (Additions during the year) 225,715 168,248
Treasury Bills are debt securities issued by the Bank of Ghana for a term of three months, six months or a year and are classified as available for sale investments. Bills are carried at cost.
6. ACCOUNT RECIEVABLES AND PREPAYMENT: GH¢ 620,277
This is made up as follows:
2008
(GH¢)
2007(GH¢)
Levies Due from Insurers and Brokers 90,004 203,581 IITC Debtors 3,416 32,442 Staff Advances 355,959 325,118
Sundry Debtors 28,046 58,986 Accrued Investments Income 40,146 12,523
Withholding Tax Credit 6,293 5,571
Receivable from Provident Fund 11,144 -
Prepaid Insurance Expense 23,751 14,980
Compensation Fund 16,047 -
VA 45,471 36,791
Others 6,634
620,277 696,626
National Insurance Commission Annual Report 2008 75
4. GAIN ON DISPOSAL OF ASSETS This is made up as follows:
2008
(GH¢)
2007(GH¢)
Cost 13,717 223,882 Accumulated Depreciation (10,184) (223,882) Net Book Value 3,533 - Proceeds 10,599 4,856 Gain/(Loss) on Disposal 7,066 4,856
5. SHORT TERM INVESTMENTS: GH¢711,509
This is made up as follows:
2008
(GH¢)
2007(GH¢)
Treasury Bills 268,198 237,396 Fixed Deposits 381,154 191,976 Non-negotiable Certificate of Deposit 62,157 56,422 711,509 485,794
Purchase of Investments (Additions during the year) 225,715 168,248
Treasury Bills are debt securities issued by the Bank of Ghana for a term of three months, six months or a year and are classified as available for sale investments. Bills are carried at cost.
6. ACCOUNT RECIEVABLES AND PREPAYMENT: GH¢ 620,277
This is made up as follows:
2008
(GH¢)
2007(GH¢)
Levies Due from Insurers and Brokers 90,004 203,581 IITC Debtors 3,416 32,442 Staff Advances 355,959 325,118
Sundry Debtors 28,046 58,986 Accrued Investments Income 40,146 12,523
Withholding Tax Credit 6,293 5,571
Receivable from Provident Fund 11,144 -
Prepaid Insurance Expense 23,751 14,980
Compensation Fund 16,047 -
VA 45,471 36,791
Others 6,634
620,277 696,626
4. GAIN ON DISPOSAL OF ASSETS
This is made up as follows:
5. SHORT TERM INVESTMENTS: GH¢711,509
This is made up as follows:
Treasury Bills are debt securities issued by the Bank of Ghana for a term of three months, six months or a year and are classified as available for sale investments. Bills are carried at cost.
6. ACCOUNT RECEIVABLES AND PREPAYMENT: GH¢ 620,277
This is made up as follows:
National Insurance Commission I 2008 Annual Report
70
National Insurance Commission Annual Report 2008 76
7. ACCOUNTS PAYABLE AND ACCRUALS: GH¢ 77,449
This is made up as follows:
Notes 2008
(GH¢)
2007(GH¢)
Accrued Expenses 16 44,971 46,382
West African Insurance Institute 17,753 3,842
Sundry Payable 2,000 -
Provident Fund / Wages Payable 410 2,115
Compensation Fund - 13,723
Deposit on TV Advertising 9,740 -
Current Portion of Long-Term Loan 2,575 -
77,449 66,062
8. a. GRANT INCOME: GH¢ 80,145 This is made up of EMCB/FINSSP Grants and Deferred Grant Income
2008
(GH¢)
2007(GH¢)
EMCB/FINSSP Grants represents grants received from Government of Ghana through the Ministry of Finance & Economic Planning
80,145
51,840
b. DEFERRED GRANT INCOME: GH¢ 452,929
2008
(GH¢)
2007(GH¢)
Balance at 1st January 478,364 503,799
Additions - -
478,364 503,799
Transfer to Income and Expenditure Account (25,435) (25,435)
Balance at 31st December 452,929 478,364
Current Portion (within a year) 25,435 25,435
Long Term Portion (after one year) 427,494 452,930
452,929 478,364
National Insurance Commission Annual Report 2008 76
7. ACCOUNTS PAYABLE AND ACCRUALS: GH¢ 77,449
This is made up as follows:
Notes 2008
(GH¢)
2007(GH¢)
Accrued Expenses 16 44,971 46,382
West African Insurance Institute 17,753 3,842
Sundry Payable 2,000 -
Provident Fund / Wages Payable 410 2,115
Compensation Fund - 13,723
Deposit on TV Advertising 9,740 -
Current Portion of Long-Term Loan 2,575 -
77,449 66,062
8. a. GRANT INCOME: GH¢ 80,145 This is made up of EMCB/FINSSP Grants and Deferred Grant Income
2008
(GH¢)
2007(GH¢)
EMCB/FINSSP Grants represents grants received from Government of Ghana through the Ministry of Finance & Economic Planning
80,145
51,840
b. DEFERRED GRANT INCOME: GH¢ 452,929
2008
(GH¢)
2007(GH¢)
Balance at 1st January 478,364 503,799
Additions - -
478,364 503,799
Transfer to Income and Expenditure Account (25,435) (25,435)
Balance at 31st December 452,929 478,364
Current Portion (within a year) 25,435 25,435
Long Term Portion (after one year) 427,494 452,930
452,929 478,364
National Insurance Commission Annual Report 2008 76
7. ACCOUNTS PAYABLE AND ACCRUALS: GH¢ 77,449
This is made up as follows:
Notes 2008
(GH¢)
2007(GH¢)
Accrued Expenses 16 44,971 46,382
West African Insurance Institute 17,753 3,842
Sundry Payable 2,000 -
Provident Fund / Wages Payable 410 2,115
Compensation Fund - 13,723
Deposit on TV Advertising 9,740 -
Current Portion of Long-Term Loan 2,575 -
77,449 66,062
8. a. GRANT INCOME: GH¢ 80,145 This is made up of EMCB/FINSSP Grants and Deferred Grant Income
2008
(GH¢)
2007(GH¢)
EMCB/FINSSP Grants represents grants received from Government of Ghana through the Ministry of Finance & Economic Planning
80,145
51,840
b. DEFERRED GRANT INCOME: GH¢ 452,929
2008
(GH¢)
2007(GH¢)
Balance at 1st January 478,364 503,799
Additions - -
478,364 503,799
Transfer to Income and Expenditure Account (25,435) (25,435)
Balance at 31st December 452,929 478,364
Current Portion (within a year) 25,435 25,435
Long Term Portion (after one year) 427,494 452,930
452,929 478,364
7. ACCOUNTS PAYABLE AND ACCRUALS: GH¢ 77,449
This is made up as follows:
8. a. GRANT INCOME: GH¢ 80,145 This is made up of EMCB/FINSSP Grants and Deferred Grant Income
b. DEFERRED GRANT INCOME: GH¢ 452,929
Deferred Income represents grants from the Non-Banking Financial Institutions Project for the construction and furnishing of the Insurance Industry Training Centre (IITC) building, which is being written-off over their respective depreciable lives.
National Insurance Commission I 2008 Annual Report
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National Insurance Commission Annual Report 2008 77
9. LONG TERM LOANS: GH¢ 2,575
2008
(GH¢)
2007(GH¢)
At 1st January - 2,575
At 31st December - 2,575
Long Term Loan represents unsecured interest free loans from certain insurance companies in Ghana to pre-finance the construction of the Insurance Industry Training Centre (IITC) building. Balance brought forward has been transferred to current liabilities.
10. RECONCILIATION OF EXCESS OF INCOME OVER EXPENDITURE TO CASFLOW FROM
OPERATING ACTIVITIES
notes 2008 (GH¢)
2007
(GH¢)
Excess of Income over Expenditure 351,257 51,637
Amortisation of Capital Grant 8b (25,435) (25,435)
Depreciation 3 156,716 164,932
Gain on Disposal of Property and Equipment 4 (7,066) (4,856)
Interest Income (1,663) (1,806)
Investment Income (98,718) (50,398)
Increase/Decrease in accounts receivable and prepayment
76,349 146,049
Increase / (decrease) in accounts payable and accruals 11,387 (55,732)
Cash Generated from Operating Activities 462,827 224,391
11. CASH AND CASH EQUIVALENT
Changes during
the year
2008
(GH¢)
2007
(GH¢)
Cash and bank 266,110 383,699 117,589
12. EQUITY SHARES IN GHANA INSURANCE COLLEGE
This represents National Insurance Commission’s share holding in the Ghana Insurance College.
13. DEFERRED RENT INCOME (GIC)
National Insurance Commission Annual Report 2008 77
9. LONG TERM LOANS: GH¢ 2,575
2008
(GH¢)
2007(GH¢)
At 1st January - 2,575
At 31st December - 2,575
Long Term Loan represents unsecured interest free loans from certain insurance companies in Ghana to pre-finance the construction of the Insurance Industry Training Centre (IITC) building. Balance brought forward has been transferred to current liabilities.
10. RECONCILIATION OF EXCESS OF INCOME OVER EXPENDITURE TO CASFLOW FROM
OPERATING ACTIVITIES
notes 2008 (GH¢)
2007
(GH¢)
Excess of Income over Expenditure 351,257 51,637
Amortisation of Capital Grant 8b (25,435) (25,435)
Depreciation 3 156,716 164,932
Gain on Disposal of Property and Equipment 4 (7,066) (4,856)
Interest Income (1,663) (1,806)
Investment Income (98,718) (50,398)
Increase/Decrease in accounts receivable and prepayment
76,349 146,049
Increase / (decrease) in accounts payable and accruals 11,387 (55,732)
Cash Generated from Operating Activities 462,827 224,391
11. CASH AND CASH EQUIVALENT
Changes during
the year
2008
(GH¢)
2007
(GH¢)
Cash and bank 266,110 383,699 117,589
12. EQUITY SHARES IN GHANA INSURANCE COLLEGE
This represents National Insurance Commission’s share holding in the Ghana Insurance College.
13. DEFERRED RENT INCOME (GIC)
National Insurance Commission Annual Report 2008 77
9. LONG TERM LOANS: GH¢ 2,575
2008
(GH¢)
2007(GH¢)
At 1st January - 2,575
At 31st December - 2,575
Long Term Loan represents unsecured interest free loans from certain insurance companies in Ghana to pre-finance the construction of the Insurance Industry Training Centre (IITC) building. Balance brought forward has been transferred to current liabilities.
10. RECONCILIATION OF EXCESS OF INCOME OVER EXPENDITURE TO CASFLOW FROM
OPERATING ACTIVITIES
notes 2008 (GH¢)
2007
(GH¢)
Excess of Income over Expenditure 351,257 51,637
Amortisation of Capital Grant 8b (25,435) (25,435)
Depreciation 3 156,716 164,932
Gain on Disposal of Property and Equipment 4 (7,066) (4,856)
Interest Income (1,663) (1,806)
Investment Income (98,718) (50,398)
Increase/Decrease in accounts receivable and prepayment
76,349 146,049
Increase / (decrease) in accounts payable and accruals 11,387 (55,732)
Cash Generated from Operating Activities 462,827 224,391
11. CASH AND CASH EQUIVALENT
Changes during
the year
2008
(GH¢)
2007
(GH¢)
Cash and bank 266,110 383,699 117,589
12. EQUITY SHARES IN GHANA INSURANCE COLLEGE
This represents National Insurance Commission’s share holding in the Ghana Insurance College.
13. DEFERRED RENT INCOME (GIC)
9. LONG TERM LOANS: GH¢ 2,575
Long Term Loan represents unsecured interest free loans from certain insurance companies in Ghana to pre-finance the construction of the Insurance Industry Training Centre (IITC) building. Balance brought forward has been transferred to current liabilities.
10. RECONCILIATION OF EXCESS OF INCOME OVER EXPENDITURE TO CASHFLOW FROM OPERATING ACTIVITIES
11. CASH AND CASH EQUIVALENT
12. EQUITY SHARES IN GHANA INSURANCE COLLEGEThis represents National Insurance Commission’s share holding in the Ghana Insurance College.
13. DEFERRED RENT INCOME (GIC)This represents Rent Income received from the Ghana Insurance College which is to be recognized over three years from 2009.
14. CAPITAL COMMITMENTS There were no Capital Commitments as at 31 December 2008 (2007:Nil).
National Insurance Commission I 2008 Annual Report
72
15. CONTINGENT LIABILITIES There were no contingent liabilities at 31 December, 2008 (2007: Nil)
16. ACCRUED EXPENSES This is made up as follows:
National Insurance Commission Annual Report 2008 78
This represents Rent Income received from the Ghana Insurance College which is to be recognized over three years from 2009.
14. CAPITAL COMMITMENTS
There were no Capital Commitments as at 31 December 2008 (2007:Nil).
15. CONTIGENT LIABILITIES
There were no contingent liabilities at 31 December, 2008 (2007: Nil)
16. ACCRUED EXPENSES
This is made up as follows:
2008
(GH¢)
2007 (GH¢)
Audit Fees 6,620 4,428
Medical Expenses 5,333 3,724
Telephone 3,225 2,565
Water and Electricity 8,145 105
Withholding Tax Payable 2,302 3,563
PAYE, SSF, T&T, Repairs and Others 19,346 31,997
44,971 46,382
National Insurance Commission I 2008 Annual Report
73
SOLVENCY GUIDELINES
SOLVENCY REGIME UNDER INSURANCE ACT, 2006 (ACT 724)
BackgroundThe current solvency regime requires the assets of Non-Life insurance companies at any point in time, to exceed their liabilities by at least 10% of net premium income in order to be technically solvent. In the case of Life companies, assets must at least equal liabilities.
In both cases, whilst all the liabilities on the Balance Sheet are taken into consideration, the assets are weighted according to some prescribed criteria to emphasize liquidity, safety and availability.
The above regime has been criticised as not being suitable for the current relatively stable macro economic environment with low interest rates.
Again, it has been difficult for some industry practitioners to fully understand the current guidelines especially the weighting factors and procedures. There have therefore been calls for a review of the current regime.
The NIC, in response to the above, set up an industry committee to review the guidelines. The report of the committee was rendered obsolete by further changes in the country’s economic situation and international regulatory standards.
In a related development, the 2008 National budget indicated the need for a review of the regulatory framework to enable insurance companies restructure their investment portfolios to reflect the current economic environment.
Based on the above considerations, the following Solvency guidelines have been issued by the National Insurance Commission to govern the investments of insurance companies in Ghana.
ObjectivesThe objectives of the solvency guidelines are as follows;
i. To ensure appropriate asset spread, good yield, and safety of the investments of insurance companies as well as appropriate asset liability matching.
ii. To ensure that Ghana’s solvency regime complies with international standards and best practice.iii. To enhance the contribution of insurance companies to the country’s economic development.
ScopeThis document covers the following subjects;
i. The solvency marginii. Solvency control levelsiii. Investment mix requirementsiv. Investment to total asset ratiov. Valuation rulesvi. Effective Date and Transitional arrangements
The Solvency marginThe International Association of Insurance Supervisors’ (IAIS) standard on solvency requires a solvency margin to be set to provide a safety buffer against events that may occur that are outside
National Insurance Commission I 2008 Annual Report
74
the expected range of events for which risk reduction measures have been taken. This margin is also meant to serve as a buffer for assets whose full values may not be realised due to impairment or some factors which may not have been identified at Balance Sheet dates. The margin also reflects risks not taken into account in valuing liabilities including off-balance sheet exposures.
Both Life and Non-Life insurance companies are therefore required to have a financial solvency margin of 50% or the minimum capital which ever is higher. This means that at any point in time, an insurance company’s assets must be at least 150% of its liabilities or its Net Assets must be at least equal to the minimum capital requirement in order to be solvent.
Please note that the solvency margin shall in no case be less than the minimum capital requirement.
Solvency control levelsThe following control levels have been put in place to enable the NIC take a proactive approach of dealing with emerging insolvencies at the initial stages before they degenerate into crises. The solvency control levels and their consequent corrective actions are as follows;
Level Margin Corrective Action
GreenIf assets are 150% or more of li-abilities
Routine Monitoring
AmberIf assets are more than 125% of li-abilities but less than 150% thereof
Restructure investments
RedIf assets are at least equal to liabili-ties but less than 125% of liabilities
Enforcement Action/capital injection
Black If liabilities are more than assetsSuspend licence with the possibility of final licence withdrawal and liquidation
Investment MixSince this solvency regime mainly dwells on financial solvency, there is the need to ensure that investments of insurance companies are adequately spread. The investment portfolio of insurance companies is therefore required to comply with the following investment mix under the new solvency regime;
InvestmentProportion of Investment Portfolio
Life Non-Life
Government securities, cash and de-posits (excluding Statutory Deposit)
At least 35% At least 35%
Statutory DepositAt least 10% of minimum
capitalAt least 10% of minimum capital
Listed Stocks 0 – 30% 0 – 30%
Unlisted Stocks 0 – 20% 0 – 10%
National Insurance Commission I 2008 Annual Report
75
Mutual Funds0 – 20%
0 – 20%
Investment Properties 10 – 30% 0 – 20%
Other investments approved by the NIC
0 – 10% 0 – 10%
Investments to Total Assets ratioIn addition to the investment mix, it is required that at any point in time, the ratio of investments to total assets should not be less than 55%. That is, at least 55% of the total assets of the company must be in direct investments. Direct investments are defined as assets that directly earn cash income or appreciate in value (capital appreciation) over time.
Valuation RulesValuation rules for both financial reporting and solvency assessments will be as prescribed by the International Financial Reporting Standards (IFRS). Effective implementation of and compliance with the IFRS by all insurance companies will provide an ideal condition for the solvency regime. This is because the IFRS has clear and appropriate valuation rules on both assets and liabilities.
The NIC is in the process of procuring a consultant to develop an accounting manual which is IFRS compliant for the insurance companies and also provide training on IFRS for the insurance industry. It is expected that this will enhance the financial reporting capacity under the IFRS and provide the necessary guidelines needed for the effective implementation of the solvency guidelines.
There will also be provisions in the Regulations to the Insurance Act, 2006 on related party transactions and assets.
Again, both the IAIS and the IASB are considering special valuation rules for insurance assets and liabilities. The final results of their discussion will be incorporated into the manual.
Effective Date and Transitional ArrangementsThese Solvency guidelines take effect in January 2008. This means that the 2008 annual returns and subsequent quarterly and annual returns will be assessed under the new regime.
However, a two year transitional period will be allowed within which all insurance companies will be expected to comply fully with the new solvency margins.
All insurance companies will be expected to have a solvency margin of at least 30% or Minimum Capital, which ever is higher by 31st December 2008, at least 40% margin by 31st December, 2009 and at least 50% margin by 31st December 2010 and thereafter.
National Insurance Commission I 2008 Annual Report
76
LIS
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760
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494
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National Insurance Commission I 2008 Annual Report
77
20
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N 5
721,
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248174-7
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221430
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868,
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666485-7
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010680-2
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80146 /
7010677/9
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668610
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vanguard
@ghana.c
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Independence
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770338/7
68335
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0084,
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220966/2
27439/2
25296
Fax:
237872/3
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.gh
Cale
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Box C
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728,
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232008
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230084
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, 8 B
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7753,
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911023-4
, 246319,
245921
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222008
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Box 7
82,
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221096/2
29807/2
33964
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233964
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15
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Box A
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644 A
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235039,
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0244371327
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234017
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17
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778106,
782871
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ghana.c
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18
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363,
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780601-1
5
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780615
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242233/2
40632
Fax:2
37156
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.gh
No.
C551/4
, Cola
Str
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Kokom
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(Adj.
ATTC),
Acc
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National Insurance Commission I 2008 Annual Report
78
Nat
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Ann
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311
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4906
1, 2
4573
7, 2
2842
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5034
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National Insurance Commission I 2008 Annual Report
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Nat
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Ann
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8 89
LIS
T O
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IN
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LIS
T O
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Te
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3120
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tonm
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306
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160
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Fax:
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PZ B
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National Insurance Commission I 2008 Annual Report
82
18
Glo
bal I
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Bro
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td.
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713
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ccra
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2210
21
Fax:
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869
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ccra
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0244
3160
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loor
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20
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Box
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2463
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234
128
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Opp
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22
Insu
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8 Te
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3118
2-3,
667
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6217
4 Fa
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P. O
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24
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774,
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Tel:
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064,
0244
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185,
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69,
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Tel:
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3
209
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668
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Tel:
764
023,
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573,
764
573,
764
390,
764
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Fax:
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3683
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117
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3547
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tonm
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8092
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10
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173
1, C
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829
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30
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’) L
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11
Cro
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Box
152
82 A
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249
288/
2492
89
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250
915
2nd F
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12
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Box
71,
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908
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380
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936,
024
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167
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14
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. Box
257
7, T
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900,
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899
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3882
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Te
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2934
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4670
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224
809
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16
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1389
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4206
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17
Gha
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P.
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Box
CT
2868
, Can
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Tel:
250
384
Fax:
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518
Last
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Acc
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National Insurance Commission I 2008 Annual Report
83
38U
nive
rsal
Ins
uran
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onsu
ltan
ts L
td.
P. O
. Box
CT
117,
Can
tonm
ents
, Acc
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Tel:
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2293
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Fax:
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944
e-m
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brok
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com
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Tel:
024
432
7960
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P. O
. Box
An
6681
Acc
ra-N
orth
Te
l: 2
3006
5, 2
3216
5, 2
3456
8 Fa
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2913
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662
744/
6628
33
Fax:
662
833
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Cha
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29
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O.
Box
T.7
9, S
tadi
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Tel:
232
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Fax:
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569
26 F
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nue,
Ada
brak
a, A
ccra
.
30
MID
AS I
nsur
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Bro
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Lim
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P. O
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AN
105
54 A
ccra
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Tel:
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Fax:
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667
E-m
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Plot
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Kan
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31
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. Box
206
, Tr
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Tel :
237
242,
911
785,
024
369
0363
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77
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4 N
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Rid
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ccra
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32
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Lim
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Box
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1443
8 Acc
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237
058,
020
-201
8102
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33
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811
8 Acc
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34
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. Box
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912
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Tel.
7619
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7866
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0243
7696
5
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786
602
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35
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468
, Acc
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Tel:
224
559
Kan
da,
East
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36
Tran
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imited
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178
41,
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230
861,
024
427
2060
45
Dad
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Kan
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37
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125
66,
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Te
l: (
233-
21)2
4486
1, 2
5618
3, 2
2030
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213/
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National Insurance Commission I 2008 Annual Report
84
38U
nive
rsal
Ins
uran
ce C
onsu
ltan
ts L
td.
P. O
. Box
CT
117,
Can
tonm
ents
, Acc
ra.
Tel:
222
076/
2293
62
Fax:
233
944
e-m
ail:
unic
brok
@gh
ana.
com
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915
5, K
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Tel:
024
432
7960
, 02
0 81
3296
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2387
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6681
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3006
5, 2
3216
5, 2
3456
8 Fa
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P. O
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117,
Can
tonm
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, Acc
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Tel:
222
076/
2293
62
Fax:
233
944
e-m
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brok
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432
7960
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3296
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2387
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6681
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3006
5, 2
3216
5, 2
3456
8 Fa
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2565
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2171
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