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Positive results for MRoA despite industry down-turn

08 July 2008 Melanie Blythe

Munich Reinsurance Company of Africa (MRoA) – the largest reinsurer in Sub-Saharan Africa – today posted strong underwriting results for 2007, making it another year of good returns for the multinational, despite the fact that several short-term insurers are reporting a down-turn in profits after a number of positive years.

Recently appointed CEO, Junior Ngulube, said that within this context, the results were affirmation that MRoA’s disciplined approach to underwriting and its focus on Transformation were paying dividends.

“These results are indeed pleasing as 2007 saw an overall decrease in reinsurance spend by the South African direct insurance market,” said Ngulube. “To achieve a healthy growth in gross premium and net income in such a climate is very satisfactory,” he added.

MRoA announced a 25.4% increase in gross premium income to R3, 2billion, and net income after tax amounting to R230, 2million.

These results follow the announcement that parent company – Munich Re Group – achieved a record result for the fourth consecutive year, posting a profit of €3.9billion in the 2007 financial year. This far exceeded its earlier profit guidance of €3.5billion- €2.8billion.

Ngulube maintained that the above average financial performances of MRoA and its parent company meant the corporation was well-positioned to weather the tougher economic climate predicted for the years ahead.

“Our disciplined approach to business will ensure that we are not severely affected by the current slide into a soft market cycle,” said Ngulube.  “We are also working on other ways to build our competitive advantage in the market – both through constant innovation and a commitment to Transformation.”

The year in review saw MRoA renew its policy on Transformation with the launch of its company-wide ‘Transformation Challenge’.

Ngulube said that a severe skills shortage threatened to slow growth in the South African financial services sector, and if not addressed could hamper the country’s economic growth and international competitiveness.

He added that transformation in the labour market should begin at the level of people development, not just employment.

“At MRoA we recognise that Transformation is one of the major challenges facing the financial sector in this country. The opportunity now exists for companies to invest in skills development to ensure that the industry has the relevant expertise it will need in five or ten years’ time. Financial, actuarial and leadership skills – already so severely in demand – if not developed today will leave the sector in a critical situation and unable to meet the demands of an increasing client base in the future,” said Ngulube.

“We are choosing to view the current skills shortage as an opportunity for Transformation and this positive outlook will position us as the employer of choice for talented previously disadvantaged individuals who come into the labour market.”

As proof of this commitment, MRoA’s Annual Report reveals that the company has out-performed the Transformation goals set by the Financial Services Charter in almost every category, with more than 50% of middle management currently made up of black people - 20% of which is represented by black women.

“People, essentially, are our greatest asset and here in South Africa we are lucky to have a hugely diverse population from which to draw employees.  In terms of the strategic advantages that diversity can bring, we are better placed to harness these benefits than most other countries. The time is ripe to invest in skills development and we firmly believe this focus will have a positive impact on our bottom line in the years ahead,” said Ngulube.

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