Financial institutions remained the major avenue of investments for Rwanda’s insurance sector amounting to Rwf372.8 billion, in 2023, according to the National Bank of Rwanda.

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This is equivalent to 38.7 per cent of the sector’s total assets and 7.3 per cent of total customer deposits in financial institutions.

The increase in placements is attributed to higher interest rates in financial institutions and insurers’ interest in investing in secure investment avenues.

Additionally, NBR reports that insurers also invested Rwf311.2 billion in government securities, equivalent to 32 per cent of their total assets, and Rwf79.9 billion in local equities, which represents 8.2 per cent of their total assets.

The asset composition of insurance companies is crucial for their financial stability and capacity to meet policyholder obligations.

These companies maintain a diversified asset portfolio to strike a balance between generating investment returns and maintaining enough liquidity to cover policyholder claims and other commitments.

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NBR governor, John Rwangombwa, said the sector has shown steady growth with an asset base increasing by 16.9 per cent from Rwf824 billion in 2022 to Rwf963.2 billion in 2023.

Public medical insurers continue to dominate in size, accounting for 61.7 per cent of the total assets, he noted that private insurers improved risk management and operational efficiencies to meet the solvency ratio and liquidity ratio, increasing to 296 per cent and 117 per cent, respectively.

Commenting on investment returns, Alex Bahizi told The New Times that for a long time, government securities such as Treasury Bonds were a secure investment avenue but due to inflation that roamed over the past two years, the returns were relatively low.

However, he finds investments in equities profitable for the insurance sector, with listed entities on the stock market paying out significant dividends. Additionally, the real estate sector is also profitable despite being a long-term investment.

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Denise Rwakayija, Executive Secretary of Rwanda Insurers Association (ASSAR), said there has been significant improvement in the performance of non-life insurance companies in Rwanda.

Nine out of 12 insurance companies in Rwanda are non-life insurers.

Besides investment returns, the central bank noted that for the first time in six years, the insurance sector made underwriting profit in 2023, mainly from medical insurance products. Motor insurance products made underwriting losses, however, there has been improvement since the end of 2022.

Underwriting profit consists of the earned premium remaining after claims have been paid and administrative expenses deducted. It does not include any investment income earned on held premiums.

Rwakayija said the fact that the sector realised underwriting profit demonstrates growth achieved over the years, attributed to different regulatory reforms including the charging of provisional premiums in addition to the standard ones, increasing premiums for motor policyholders, fighting frauds, and digitising services.

"Comprehensive insurance (OTF) certificate has been digitised over the last two years and we want to integrate that platform with the traffic police digital platforms to allow road cameras to easily identify those who paid their insurance coverage.”

She added that while companies will continue making investments in profitable sectors of the economy, the focus remains on growing the core business of underwriting.