Botswana Insurance : ABRIDGED AUDITED GROUP RESULTS FOR THE YEAR ENDED 31 DECEMBER 2021

ABRIDGED AUDITED GROUP RESULTS

for the year ended 31 December 2021

The directors hereby present the abridged audited consolidated financial results of Botswana Insurance Holdings Limited (BIHL) and its subsidiaries (the group) for the year ended 31 December 2021.

GROUP CONSOLIDATED STATEMENT OF FINANCIAL POSITION

As at 31 December 2021

CORPORATE

INFORMATION

DIRECTORS

Mahube Mpugwa (Acting Chairperson)

Catherine Lesetedi (Group Chief Executive Officer)

Kudakwashe Mukushi (Group Chief Financial

Officer)***

Andrew Cartwright**

Chandra Chauhan

Robert Dommisse**

John Hinchliffe*

Lieutenant General Tebogo Masire

Nigel Suliaman**

Kobus Vlok**

• British
• South African
• Zimbabwean

REGISTERED OFFICE

Plot 66458, Block A 3rd Floor Fairgrounds Office Park Gaborone, Botswana

PO Box 336, Gaborone, Botswana Tel: [phone]

Fax: [phone] www.bihl.co.bw

TRANSFER SECRETARIES

PricewaterhouseCoopers Proprietary Limited

Plot 50371, Fairgrounds Office Park

PO Box 294, Gaborone, Botswana

AUDITOR

Ernst & Young

2nd Floor, Letshego Place Khama Crescent

PO Box 41015, Gaborone, Botswana

KEY FEATURES

REVENUE

• Net insurance premium income increased by 7% to P3,1 billion
• Recurring premium income increased by 15% to P1,9 billion
• Fee revenue increased by 17 % to P128 million
• Value of new business increased by 37% to P176 million

ASSETS UNDER MANAGEMENT

• Assets under management (AUM) increased by 19% to P36 billion

EARNINGS

• Operating profit decreased by 56% to P171 million
• Core earnings decreased by 54% to P197 million
• Share of profit of associates increased by 19% to P305 million
• Profit attributable to equity holders decreased by 27% to P388 million

SOLVENCY

• The business is well capitalised; required capital for the group subsidiaries is
  covered 6,8 times (December 2020: 6,3 times)

EMBEDDED VALUE

• Embedded value increased by 11% to P5,33 billion (December 2020: P4,78 billion)
• Return on group embedded value decreased marginally to 12% (December 2020: 13%)

DIVIDENDS

• P183 million paid as dividends during the period (December 2020: P424 million)
• Final dividend proposed of P200 million net of tax (December 2020: P184 million net of tax)

2021	2020
P'000	P'000

ASSETS

Property and equipment	183 232	179 261
Intangible assets	107 076	99 089
Right-of-use assets	8 112	15 514
Investment property	10 160	10 160
Investments in associates and joint ventures	1 972 698	1 713 994
Long-term reinsurance assets	10 855	9 259
Financial assets at fair value through profit or loss	15 385 244	14 489 435
Bonds (Government, public authority, listed and unlisted corporates)	8 663 449	9 282 087
-  Investment in property funds and companies	1 173 325	1 055 880
-  Equity investments (local and foreign)	2 403 845	2 042 429
-  Money market instruments	3 144 625	2 109 039
Loans at amortised cost	31 957	36 132
Insurance and other receivables	280 725	284 199
Cash, deposits and similar securities	137 418	239 637
Total assets	18 127 477	17 076 680

EQUITY AND LIABILITIES

Equity attributable to equity holders of the parent

Stated capital	154 936	154 936
Non-distributable reserves	395 716	243 967
Retained earnings	2 781 611	2 585 714
Total equity attributable to equity holders of the parent	3 332 263	2 984 617
Non-controlling interests	18 728	25 228
Total equity	3 350 991	3 009 845
Liabilities
Policyholder liabilities under insurance contracts	10 444 306	10 847 636
External investors in consolidated funds	3 635 183	2 519 241
Derivatives instrument	42 366	2 400
Deferred tax liability	23 780	19 521
Lease liability	9 234	16 858
Insurance and other payables	616 587	625 907
Tax payable	3 441	31 736
Related party balances	1 589	3 536
Total equity and liabilities	18 127 477	17 076 680

2021 DECEMBER 31 ENDED YEAR THE FOR RESULTS FINANCIAL AUDITED GROUP AUDITED ABRIDGED BIHL

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GROUP CONSOLIDATED

INCOME STATEMENT

For the year ended 31 December 2021

2021	2020
P'000	P'000

	Revenue
	Net insurance premium income	3 084 928	2 879 625
	Gross premium income -  recurring	1 880 903	1 635 388
	-  single	1 258 320	1 301 267
	Insurance premiums ceded to reinsurers	(54 295)	(57 030)
	Revenue from contracts with customers	127 760	108 935
	Investment income	74 149	67 761
	Interest income using the effective interest rate (EIR)	4 467	6 838
	Other interest income	1 050 615	658 991
	Fair value gains/(losses) from derivative instrument	39 966	(3 410)
	Fair value loss from external investors in consolidated funds	(23 007)	(31 878)
	Net loss from financial assets held at fair value through profit or loss	(972 658)	(401 515)
	Total revenue	3 386 220	3 285 347
	Net insurance and investment contract benefits and claims	(2 277 887)	(2 058 818)
2021
Gross insurance benefits and claims	(2 462 420)	(1 689 071)
DECEMBER31	Reinsurance claims	131 994	39 240
Change in contract liabilities ceded to reinsurers	(1 596)	(1 541)
	Change in liabilities under investment contracts	(349 195)	(3 912)
	Change in policyholder liabilities under insurance contracts	403 330	(403 534)
ENDED
Expenses	(937 043)	(819 020)
YEAR	Sales remuneration	(516 554)	(424 194)
Administration expenses	(417 915)	(374 909)
THE	Finance cost on leases (IFRS 16)	(543)	(861)
Impairment losses	(2 031)	(19 056)
FOR
RESULTS	Profit before share of profit of associates, joint ventures and other income	171 290	407 509
Profit on sale of subsidiary	-	1 396
FINANCIAL	Share of profit of associates and joint ventures	305 333	257 268
Profit before tax	476 623	666 173
	Tax expense	(83 886)	(128 664)
AUDITED	Profit for the period	392 737	537 509
Profit attributable to:	4 715	5 510
GROUP	- Non-controlling interests
	-  Equity holders of the parent	388 022	531 999
AUDITED
	392 737	537 509
ABRIDGEDBIHL	Earnings per share (thebe) attributable to ordinary equity holders of the parent
-  Basic	140	193
	-  Diluted	140	193

GROUP CONSOLIDATED STATEMENT

OF COMPREHENSIVE INCOME

For the year ended 31 December 2021

	2021	2020
	P'000	P'000
Profit for the period	392 737	537 509
Other comprehensive income
Other comprehensive income to be reclassified to profit or loss in
subsequent periods (net of tax)
Exchange differences on translation of foreign operations	125 130	(70 212)
Total comprehensive income for the period	517 867	467 297
Total comprehensive income attributable to:
-  Equity holders of the parent	513 152	461 787
- Non-controlling interests	4 715	5 510
	517 867	467 297

2021 DECEMBER 31 ENDED YEAR THE FOR RESULTS FINANCIAL AUDITED GROUP AUDITED ABRIDGED BIHL

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GROUP CONSOLIDATED STATEMENT	GROUP CONSOLIDATED STATEMENT
OF CHANGES IN EQUITY	OF CASH FLOWS
For the year ended 31 December 2021	For the year ended 31 December 2021

BIHL ABRIDGED AUDITED GROUP AUDITED FINANCIAL RESULTS FOR THE YEAR ENDED 31 DECEMBER 2021

				Total
				equity
				attri-
		Non-		butable
		distri-		to equity	Non-
	Stated	butable	Retained	holders of	controlling	Total
	capital	reserves	earnings	the parent	interests	equity
	P'000	P'000	P'000	P'000	P'000	P'000
For the year ended
31 December 2021
As at 1 January 2021
Opening balances	154 936	243 967	2 585 714	2 984 617	25 228	3 009 845
Profit for the period	-	-	388 022	388 022	4 715	392 737
Foreign currency translation
reserve movement	-	125 130	-	125 130	-	125 130
Dividend paid	-	-	(183 541)	(183 541)	(11 215)	(194 756)
Transfers from retained
earnings to non-distributable
reserves	-	19 542	(19 542)	-	-	-
Other movement in reserves	-	7 077	10 958	18 035	-	18 035
Balances as at
31 December 2021	154 936	395 716	2 781 611	3 332 263	18 728	3 350 991
For the year ended
31 December 2020
As at 1 January 2020
Opening balances	154 936	223 186	2 561 131	2 939 253	23 597	2 962 850
Profit for the period	-	-	531 999	531 999	5 510	537 509
Foreign currency translation
reserve movement	-	(70 212)	-	(70 212)	-	(70 212)
Dividend paid	-	-	(424 201)	(424 201)	(3 879)	(428 080)
Transfers from retained
earnings to non-distributable
reserves	-	91 799	(91 799)	-	-	-
Other movement in reserves	-	(806)	8 584	7 778	-	7 778
Balances as at
31 December 2020	154 936	243 967	2 585 714	2 984 617	25 228	3 009 845

	2021	2020
	P'000	P'000
Net cash flows from operating activities	1 770 239	955 391
Cash generated from operations	1 477 887	1 293 741
Interest received	396 008	40 341
Dividend received from equity investments	28 172	14 947
Dividend received from associates and joint ventures	147 304	105 969
Interest expense on leases (IFRS 16)	(543)	(861)
Tax paid	(83 833)	(70 666)
Dividend paid	(194 756)	(428 080)
Net cash flows utilised in investing activities	(1 867 020)	(873 276)
Purchase of property and equipment	(16 424)	(32 280)
Purchase of computer software	(18 496)	(1 934)
Proceeds from sale of investment in subsidiaries	4 151	4 388
Purchase of investment in associates	-	(2 633)
Acquisition of property investments	(122 215)	(207 605)
Purchase of bonds	(720 361)	(1 157 880)
Withdrawal/(purchase) of equity investments	90 463	(202 237)
(Purchase)/withdrawal of money market instruments	(1 090 138)	716 206
Receipts from loans receivable at amortised cost	6 000	10 698
Net cash flows from financing activities	(5 438)	(4 573)
Payment of principal portion of lease liabilities (IFRS 16)	(5 438)	(4 573)
Net (decrease)/increase in cash and cash equivalents	(102 219)	77 542
Cash and cash equivalents at the beginning of the year	239 637	162 095
Cash and cash equivalents at the end of the year	137 418	239 637

2021 DECEMBER 31 ENDED YEAR THE FOR RESULTS FINANCIAL AUDITED GROUP AUDITED ABRIDGED BIHL

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GROUP EMBEDDED VALUE

DEFINITION OF EMBEDDED VALUE

The embedded value represents an estimate of the economic value of the company excluding the value attributable to future new business and the value attributable to minority interests. The embedded value comprises:

• the value of the shareholders' net assets;
• fair value adjustments; and
• the value of in-force business.

The value of in-force business is the present value of future after-tax profits arising from business in force at the valuation date, discounted at the risk discount rate, and adjusted for the cost of capital required to support the business.

The value of new business represents the value of projected after-tax profits at the point of sale arising from new policies sold during the year to 31 December 2021, accumulated to the end of the period at the risk discount rate. The value is adjusted for the cost of capital required to support the new business.

	Embedded value results for the year ended 31 December 2021:
		Year to	Year to
		31 Dec	31 Dec
2021		2021	2020
Embedded value results	P'000	P'000
DECEMBER31
Shareholders' net assets after fair value adjustments	3 280 688	2 910 930
	Shareholders' net assets, excluding goodwill	3 280 688	2 910 930
ENDED	Value of in-force	2 044 561	1 870 893
Value before cost of capital	1 852 166	1 812 147
YEAR	Fair value adjustments	401 086	235 748
Cost of capital	(208 691)	(177 002)
FOR THE
Embedded value at the end of the period	5 325 249	4 781 823
RESULTS	Embedded value at the beginning of the year	4 781 823	4 651 546
FINANCIAL	Required capital	481 899	463 221
Required capital cover	6,8	6,3
AUDITED	Embedded value per share (Pula)	18,90	16,93
Embedded value earnings	573 102	603 960
GROUP	Change in embedded value	543 425	130 278
Movement in capital	(153 864)	49 480
AUDITED
Dividends paid	183 541	424 202
BIHL ABRIDGED	Return on embedded value (%)	12,0	13,0

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	Year to	Year to
	31 Dec	31 Dec
	2021	2020
Embedded value results	P'000	P'000
These earnings can be analysed as follows:
Expected return on life business in force	186 048	175 575
Value of new business	189 889	138 551
Value at point of sale	175 818	128 803
Expected return to the end of the period	14 071	9 748
Operating experience variances	(152 170)	55 726
Mortality/morbidity	(226 735)	57 338
Persistency	33 958	(1 942)
Expenses	24 547	(13 392)
Other	16 060	13 722
Operating assumption changes	(118 990)	(6 321)
Mortality/morbidity	(99 509)	84 481
Persistency	(27 757)	(5 432)
Expenses	(15 054)	(88 721)
Other	23 330	3 351
Embedded value earnings from operations	104 777	363 531
Investment variances	(20 523)	26 571
Economic assumption changes	27 256	(74 301)
Embedded value earnings from covered business	111 510	315 801
Return on shareholders' assets	296 256	235 512
Investment returns	(43)	(16 146)
Net profit non-life operations	296 299	251 658
Change in shareholders' fund adjustments	165 336	52 647
Changes in treasury share adjustments	(3 091)	3 425
Movement in fair value of incentive scheme shares	(3 114)	(5 830)
Movement in present value of holding company expenses	(3 049)	(5 243)
Movement in other net worth adjustments	174 590	61 705
Embedded value earnings	573 102	603 960

2021 DECEMBER 31 ENDED YEAR THE FOR RESULTS FINANCIAL AUDITED GROUP AUDITED ABRIDGED BIHL

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