Pension funds, insurance register marginal asset growth

Namibia’s Non-Bank Financial Institutions (NBFIs) registered a 13.9% growth in assets to N$370.6 billion for the year ended March 2022, mainly driven by pension funds and long-term insurance assets, latest industry figures show. 

The Namibia Financial Institutions Supervisory Authority (NAMFISA) Chief Executive Officer, Kenneth Matomola, said the sector weathered the challenging economic conditions, worsened by the COVID-19 epidemic. 

“NAMFISA focused on ensuring that the non-bank financial institutions (NBFIs) sector remains financially sound and stable. This is shown by the funding/solvency position that remained above prudential requirements,” he said while presenting the company’s Financial Annual Report. 

The sector’s asset base grew by 13.9% to N$370.6 billion at the end of December 2021. 

The report noted that the long-term insurance industry’s excess assets declined due to the slow growth in total assets, compared with the growth in total liabilities. 

Despite the decline in excess assets, the solvency and liquidity levels of the industry remained sound and sufficient to meet the minimum prudential requirements. 

“The industry investment income increased significantly by 208.8 percent to N$7.3 billion during the period under review (Figure 20). The economic recovery towards the end of 2021, especially in the equity market, mainly contributed to the increase in investment income,” the report said. 

Meanwhile, the industry’s total assets grew by 8.1% to N$66.7 billion as at 31 December 2021, compared with the previous year. 

“The growth in total assets is mainly attributed to an increase in total investments reported due to a positive financial markets performance. The total investment component makes up 90.0 percent of the total assets, which significantly influences the total asset movement as a result of improved global and regional stock markets,” added the report. 

On the same note, pension fund assets increased by 18.0% to N$213.0 billion in 2021 and current liabilities increased by 40.9% to N$3.4 billion as at 31 December 2021. 

“The increase in current liabilities resulted from the higher benefits payable balance reported as at 31 December 2021. The active members’ share account increased by 7.7 percent to N$112.4 billion as at 31 December 2021, and the pensioner accounts increased from N$25.5 billion to N$25.8 billion at the same date,” said the authority. 

NAMIFSA further indicated that the change in active member and pensioner accounts correlates with the growth in the value of investments reported for the 2021.

 

Additionally, the amount in reserve accounts increased significantly from N$29.8 billion to N$67.5 billion as at 31 December 2021. 

During the review period, the Authority achieved legislative milestones, as the NAMFISA and FIM Acts were passed in Parliament and assented by the President. 

Other achievements of the Authority include the conclusion of the five-year strategy from April 2017 to March 2022 during the review period. 

“Key highlights include the finalisation of the Risk-based Supervision Framework, which will serve as the key supervisory tool in the next strategy period; conclusion of the Market Conduct Supervision framework; and improvements in the regulatory and supervisory processes and systems amongst others,” said Matomola.

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