The Independent Uganda: You get the Truth we Pay the Price
Global reinsurance firms have publicly declared that they would not provide insurance cover for the East African Crude Oil Pipeline. But Uganda Re has assured the country that it is ready to provide the much-needed services for the project. The company’s CEO Ronald Musoke shares the growth in business and the future outlook.
What have been the highlights of Uganda Re’s performance for 2021?
2021 was a very tough year mainly resulting from the negative effects of the covid-19 pandemic disruptions to the economy and our insurance industry and Uganda Re were not spared in the process.
Nevertheless, we still managed to post some growth on our Gross Written Premium, growth of our investment income, achieved a profit before tax of UGX7.256Bn and after tax of UGX5.5Bn though this result was a drop compared to what was achieved in 2020.
The shareholders fund also grew by 13.5% from Shs 40.7Bn as of 31st December 2020 to Shs 46.2Bn in 2021.
I should also mention that we participate in the FiRe Awards every year and we emerged 1st Runners Up which was an improvement from 2nd Runners Up in 2020.
What are the reasons behind this performance?
This was mainly due to our proactiveness and prudence, increased trust in Uganda Re by our business partners, continuous monitoring and management of our expenses. The drop in performance was mainly attributed to the pandemic disruptions and spike in claims and the need for additional reserves.
What are the reasons for the low performance of life insurance business compared to the non-life business segment? What are you doing to enhance growth of the life business?
Indeed our life business didn’t perform well as we would have wished. This was mainly due to the increase in claims compared to previous years. Coupled with this, we had to increase our reserves to cushion ourselves against future anticipated claims. We also need to comply with the new IRA reserving method which meant that we provide for more reserves compared to previous years.
To improve the life business performance, we are reviewing the current terms to ensure the premiums charged are commensurate to the risk exposure and this we are doing collectively as an industry. We are also engaging our retrocessionaires for additional capacity to enhance our retentions but also cushion us in case of claims.
Should shareholders expect dividends for last year’s financial performance?
Our target is to ensure that a dividend is proposed and declared to our shareholders year on year since the first declaration in 2018 and this we managed to achieve in 2021 as well since our performance was profitable despite the challenges we had.
What is your assessment of opportunities for the country’s reinsurance industry?
The opportunities are in the areas of Oil & Gas where there are huge values of the projects to be undertaken and which would definitely require reinsurance support. The other is in Marine insurance. Agriculture insurance has also gained traction over the years creating additional reinsurance opportunities for the risk exposure exceeding that of the cedants.
Globally, re-insurers have been announcing that they won’t provide reinsurance cover for the planned East African Crude Oil Pipeline Project. What is the position of Uganda Re on taking on the EACOP’s re-insurance risks?
Yes, several international entities have made the announcement but as Uganda Re we shall provide the required reinsurance support and the reason for this is because we are confident the Oil companies have satisfied the Petroleum Authority of Uganda and other government agencies as far as the Environmental Impact Assessment is concerned and this is one of the reasons they were given a go-ahead to proceed with the planned activities. Secondly, the government was also mindful of the impact the oil & gas activities would have to the entire eco-system and they have put in place mechanisms to ensure that there is no disturbance to the same as oil companies go about their business and they will be closely monitored to ensure this is strictly complied with.
How is Uganda Re positioned to take on new re-insurance players such as Kenya Re on the Ugandan market?
New reinsurers in the market are indeed competition for Uganda Re as they tap into our market share. Having said that, we actually cooperate as opposed to cut-throat competition in that we support one another as reinsurers and make sure that we work closely together as reinsurers for the mutual benefit of our organizations.
What is the outlook for this year’s reinsurance business segment?
The economy having been fully opened up in January this year, we expect to see a revival of the economic activities which should translate into additional opportunities for our sector and which should translate into additional premiums ceded to us.
Going by the reduction in the covid-19 positive cases, we hope to see a reduction in claims for both medical and Life business and therefore improve the performance of these two lines.
We also expect a growth in revenue resulting from the opportunities from Oil & gas activities, marine and agriculture lines of business.
****
Source: Finance and Trade Publication
