Zambia Reinsurance PLC’s IFRS 17 Implementation Results in 17% Revenue Regression and Earnings Per Share Decline
- What significant impacts did the IFRS 17 have on Zambia Reinsurance PLC's financial reports?
- The IFRS 17, which came into effect in January 2023, had significant impacts on Zambia Reinsurance PLC's financial reports. It led to a decline in earnings per share from K 0.36 in 2022 to K 0.03 in 2023, and a 17% revenue regression compared to the same period in 2022, attributable to uncollected and unearned premiums. The introduction of IFRS 17 mandates that reinsurance revenue reflects the consideration to which the reinsurer expects to be entitled in exchange for the services provided on an earned basis.
Summary
- The relative stability in the macroeconomic parameters during the first half of the year had a positive impact on Zambia Reinsurance PLC.
- The new Insurance Act No. 38 of 2021, coming into effect in December 2022, is expected to be a catalyst in the growth of the company’s domestic business.
- The new financial reporting standard, IFRS 17, replacing IFRS 4 from 1st January 2023, has majorly impacted the financial statements of insurance and reinsurance companies.
- Zambia Reinsurance PLC published its first-half year results compliant with IFRS 17, showing a 17% revenue regression compared to the same period in 2022 due to uncollected and unearned premiums.
- The company reported a half-year profit before tax of K1.573 million in 2023, a 1% increase in total assets, and an improvement in cash and equivalent position.
- The earnings per share declined from K 0.36 in 2022 to K 0.03 in 2023 due to the direct impact of IFRS 17.
- The outlook of the company is positive, expecting growth from an increase in gross written premium and improved premium collections due to the operationalization of the Insurance Act No. 38 of 2021. However, no interim dividend has been proposed by the directors for the period ended 30 June 2023.
Useful links
- Zambia Reinsurance PLC (PRIMA.zm) HY2023 Interim Report
- Zambia Reinsurance PLC on AfricanFinancials
- Corporate Website
About Zambia Reinsurance PLC (PRIMA.zm)
Zambia Reinsurance PLC is a leading reinsurance company listed on the Lusaka Securities Exchange. It provides reinsurance services to insurance companies as well as managing their own other investments and products.
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