We are pleased to share the financial results for Klapton Re for the year ended 31 December 2023. This year has been transformative for the insurance industry with the implementation of IFRS 17, and we are pleased to report our performance amidst these significant changes.
The transformative implementation of IFRS 17 has significantly impacted the financial landscape, resulting in an industry-wide delay in the submission and publication of financial results for the year ended 31 December 2023. This delay was attributed to key stakeholders—including Boards, Management, External Auditors, Actuaries, and Regulators—grappling with the complexities of this intricate new standard.
In this transitional period, gross written premium has been replaced by earned premium on the income statement, while unearned premium reserve, deferred acquisition costs, and trade receivables have been supplanted by insurance contract liabilities and reinsurance assets on the statement of financial position. Moreover, the inclusion of actuarial Risk Adjustments, which represent an additional non-financial risk reserve, complements the existing claim reserves in IBNR. The profitability of insurance products was further highlighted by the expensing of Onerous Contracts for loss-making products.
Klapton Re’s Performance in the Transformation Year
The Board and Management of Klapton Re are pleased to announce a profit after tax of ZMW 27 million, driven by ZMW 1 billion in Earned Premium. With a limited claims experience, having been in operation for only three years, Management prudently based actuarial assumptions related to risk adjustments and onerous contracts on a worst-case scenario basis, resulting in higher insurance service expenses.
The Company’s investments in financial assets soared from ZMW 110 million in 2022 to ZMW 320 million, reflected in an increase in interest income from ZMW 7.2 million to ZMW 28 million. Demonstrating its commitment to meeting claim obligations, Klapton Re made claim payments of ZMW 126 million in 2023, compared to ZMW 7 million in 2022. The overall statement of financial position impact for 2023, including other comprehensive income, saw the Company’s total equity rise from ZMW 120 million to ZMW 246 million, ensuring compliance with minimum solvency requirements.
Strategic Investments and Group Performance
During the year, Klapton Re, through its subsidiary Klapton Business Park Limited, strategically acquired investment property worth USD 3.2 million. At the consolidated level, the group achieved a profit after tax of ZMW 119.7 million.
The financial results for 2023 are a testament to the dedication and hard work of all Klapton Re staff. Having navigated the full impact of IFRS 17, Klapton Re is poised to advance to the next phase of its journey, with a sharp focus on sustainable, profitable growth. By integrating advanced data analytics and cutting-edge technology into our underwriting and claims operations, we are set to deliver significant capacity to our clients in key strategic markets. This strategy will enhance our service delivery and risk management while solidifying our reputation for excellence and reliability in the industry.