Real’s H1 profit to jump 20%

Real Insurance Company of Malawi Limited expects its half-year performance and profitability to be more than 20 percent compared to the same period last year.

In the year ended December 2012, the company reported a pre-tax loss of K157 million due to two key factors; the cancellation of policies at year-end in compliance to the Reserve Bank of Malawi (RBM) directive on premium payments and the increase in reported claims.

At year-end, cancelled policies that had been outstanding for more than 90 days totalled K118 million.

But in a trading statement on Friday, company secretary Ellection Mlaviwa has, however, advised shareholders that the financial results on which this projection is based have not been audited by insurance firm’s external auditors.

The Malawi Stock Exchange (MSE)—listed insurance firm, which has been making losses for the past three years, unveiled a five-point plan at its fifth annual general meeting, to turn around the company’s fortunes to start making profits.

But the company’s chief executive officer Grant Mwenechanya said five-point plan includes business growth, aggressive debtors’ management, expenses cost management, claims cost management and human resources development to assist the company in its transformation drive.

He promised that the company, which has been growing at between 12 percent and 14 percent, will turn the corner and start posting profits.

In the first quarter [January to March], he said the company grew by 64 percent, adding by April growth had peaked at over 90 percent.

On debtors management, Mwenechanya said for the past two years, the company had “to cancel some policies that did not pay the premiums, thereby reducing the revenues”, stressing that this year, cover will be strictly on cash basis.

The CEO said expenses will be closely monitored and, because of the measures, in the Q1, expenses were 13 percent below the budget.

“On claims cost management, our business is to pay claims, but genuine claims only and not exaggerated or fraudulent claims. We have embarked in strict claims management,” he said.