Pension and life insurance assets have dropped by two percent and 5.3 percent, respectively, in the first half of this year as the sectors suffered a knock due to poor performance of the 17-counter Malawi Stock Exchange (MSE).
But financial experts have described the drop as minimal considering that the MSE registered a negative return of up to 12.3 percent.
The Reserve Bank of Malawi (RBM) Financial Stability Report for June 2026 shows that pension assets dropped from K7.9 trillion in December 2025 to K7.8 trillion in June 2026 due to unrealised losses of K571.6 billion driven by a 12.38 percent decline of shares market.
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Reads part of the report: “Consequently, total investment income turned sharply negative at K242.1 billion from K1.8 trillion in June 2025, highlighting the sector’s vulnerability to equity price movements.
“The sector’s investment portfolio remained concentrated in listed equities, which accounted for 75.9 percent of total investment assets.”
This concentration exceeded the 60 percent regulatory limit prescribed under the Financial Services (Investment Management of Life Insurers and Pension Funds).
RBM has since warned that excessive allocation to listed equities heightened the sector’s exposure to equity market volatility and increased the likelihood of significant valuation losses during market downturns.
Apart from pension fund managers, life insurance players were also affected as the subdued investment environment associated with declining share values of listed equities resulted in unrealised valuation losses.
Reads the report in part: “Sector assets contracted by 5.3 percent to K5.1 trillion, largely reflecting the sector’s substantial exposure to listed equities, which accounted for 74.5 percent of total assets, which is above the applicable regulatory benchmark.”
Meanwhile, data show that life insurance players’ deposits with financial institutions also declined by 10.2 percent to K264 billion, while unlisted shares increased by 36.8 percent to K243.3 billion.
Life Insurance and Pension Association of Malawi president Ekari Chauluka said in an interview that although the decline is negative, the drop is marginal compared to 12.38 percent negative return of MSE, which highlights the sector’s resilience.
He said: “The sector continues in efforts to diversify the investment portfolios in line with each particular player’s liability profiles and liquidity needs.
“In our opinion, the current bearish equity market is a temporary cycle and there will be some stabilisation in equity prices in due course.”
On equity concentration, Chauluka expects the situation to improve as the industry fully aligns to the requirements of the Investment of Pension Funds Directive.
Stockbrokers Malawi Limited equity investment analyst Kondwani Makwakwa said in an interview that the relatively modest decline in total assets suggests that the sector remains resilient, with the losses largely reflecting unrealised changes in market valuations.
“Going forward, the outlook will largely depend on the recovery of the equity market and broader macroeconomic conditions,” he said, adding that continued contributions, diversification and long-term investment strategies should also support asset growth,” he said.
