the return of the loss experience impacts profitability

Lhe return to normal post-covid has affected the technical profitability of the Wafa Assurance Group in 2021. The company indeed posted a non-life technical result of 188 million dirhams, down 28.1%, impacted by a return of claims to historical levels and by the return of the tightening of the rules for provisioning unpaid debts. In the Life branch, the technical result is 421 million dirhams, down 4.9%, integrating the deterioration in claims probably linked to the Covid-19 pandemic, as explained by top management during the half-year results. .

For the Chairman and CEO, Ramsès Arroub, “in 2020, there were 3 months of confinement with restrictions and very little movement of vehicles (…). So 2021 is a return to what is considered historic, with a rebound linked to a stock of files that were not processed in 2020.. On auto claims, R. Arroub explains that “since 2019, we have seen that the measures that have been taken to stem the phenomenon of fraud at the sector level and at Wafa Assurance level have started to bear fruit on the reduction of loss ratio”.

The financial result benefits from the recovery of the equity market

VOn the other hand, we are on the green for the financial result of Wafa Assurance, which is taking advantage of the rebound in the equity market in 2021. this development is the result of the recovery of the financial market and a prudent provisioning policy”. In Life, the financial result is 987 MDH, up 3.2%, reflecting the quality of the investment portfolio. It should be noted that this result is mainly due to the insured through the mechanism of profit-sharing (in savings). Taking into account the improvement in the non-technical result, the company’s net result for 2021 stands at 536 million dirhams, up 32.6%. The ROE thus stands at 9.5%. It should be noted that the turnover of Wafa Assurance has reached a new level, amounting to 9.08 billion dirhams, up 8.5%.

Promising start for Wafa Life Insurance Egypt

2021 was also marked by the ramp-up of subsidiaries driven by assistance and Life business. Their revenues amount to nearly 1.4 billion dirhams, up 20.2% compared to 2020, thus strengthening their contribution to the Group’s turnover to 14.1%. The subsidiaries present internationally contribute 11.4% to the company’s revenues. On Wafa Life Insurance Egypt, Ramses Arroub points out that “the subsidiary really started in November 2021. It only has a few weeks of activity. The first feedbacks we have on the products are appreciated and positive. We will know more at the end of June and by the end of the year, when we will have a full exercise. Our optimism and our commitment are intact, even reinforced by the field visits we make”. In addition, Wafa Assurance is closing and publishing its consolidated financial statements under IFRS for the first time. Two indicators to remember: a turnover of 9.7 billion dirhams, up 7.8% and NI of 424 million dirhams, down 6.4% under the effect of the return of non-life claims to historic levels , after the drop recorded in 2020 linked to the effects of confinement and the increase in Life claims.

War in Ukraine and inflation: details from Arroub

Asked about the probable impacts (direct or indirect) of the Ukrainian conflict on the group’s activity, the CEO declared that “we have no direct exposure in this region. Neither in terms of counterparty (no reinsurer: editor’s note) nor in terms of investments in our portfolio”. After returning in detail to the global inflationary context, and to the actions taken by the FED, the ECB or even the BoJ, R. Arroub specified that“At the beginning of the year, we were attentive to these inflationary tensions which have been accentuated by the conflict, which are at least imported, or even passed on to the Moroccan market. This inflation induces an economic slowdown and then a depreciation of assets, since it never makes good neighbors with the financial markets. Fortunately, in Morocco, we have a certain number of prices which are administered and which should weigh on public finances, but not on households, in any case not on basic necessities”. And to summarize: “Inflation leads to a deterioration in economic ratios, even a slowdown. Some even mention a risk of recession in the USA if, at the same time as the increase in the price of raw materials, the FED shrinks its balance sheet. A recession that will arrive late in Europe and then here, but lessened by public mechanisms”.

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