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At the close of the year 2020, total assets were estimated to be $987.8 million, a 5.6 percent decline when compared to the prior year. The decline in assets was mainly reflected in cash and deposit holdings, which fell by $23.1 million.
Similarly, total liabilities for the group also fell by 5.8 percent to reach $813.9 million. This is the result of reductions in provisions set aside for claims and decreases in other liabilities such as treaty accounts and premium taxes.
The capital-to-assets ratio as at December 2020 stood at 17.6 percent. This represents 0.2 of a percentage point increase over the last period. The actual solvency margin for the group was twice the amount of the required 25 percent margin, and all insurers remained solvent during the period.
The level of gross premiums recorded by the industry fell by approximately 1.7 percent to reach $488.0 million, as lines of business such as motor and property and other, recorded marginal declines in the number of policies in force. Property insurance continued to be the largest line of business, accounting for 35 percent, followed by motor, which accounted for 33 percent. These percentages are consistent with those recorded over the last two years. The level of insurance ceded remained in excess of 50 percent. Property continues to be the line of business for which reinsurance is mostly ceded. Motor insurance requires less ceding to reinsurers as this line of business is supported by the statutory fund.
Subsequent to the 2018 domestic debt restructuring programme, profitability of the sector showed signs of improvement as the return on assets stood at 3.8 percent, 2.1 percentage points higher than in 2019. The net income position improved as the industry recorded lower underwriting expenses. This fall in expenses stemmed from lower-than-usual claims from lines of business such as motor, following the first COVID-19 lockdown. As at the end of December 2020, preliminary estimates indicate an approximate 6 percent falloff in the level of claims for the motor vehicle line of business
The combined assets at end-2020 for the six companies writing life insurance were $2,749.8 million, representing an increase of 5.7 percent over the comparable period one year earlier. This increase in assets was driven largely by the growth in related party investments which were estimated to be approximately $1,233.5 million, 8 percent higher than recorded at the end of December 2019. Government and company bonds, the second largest component of investments, increased by approximately 8 percent.
Similarly, total liabilities, which were driven by increases in life insurance and annuity provisions, rose by 2.3 percent to reach approximately $1,424.0 million.
At the end of 2020, capital as a percentage of assets was an estimated 48.2 percent, 1.7 percentage points higher than end-2019. All entities exceeded the required solvency margin and the assets base exceeded liabilities by approximately 93 percent.
Gross premiums written fell by 3.7 percent as all lines of business with the exception of industrial life and group life reported lower premiums than the prior year. The ordinary life line of business continued to account for over half of the premiums generated by the life sector in 2020. The 53 percent recorded reflected an increase of 3 percentage points when compared to 2019.
Profitability for the sector dipped slightly in 2020, falling by 0.5 percentage points to reach 4.3 percent. The sector experienced a fall in total expenses of $60.4 million, but this was overshadowed by the $65.8 million decline in revenue recorded during the period as a result of lower returns from related party investments.
Adapted from the 2020 Financial Stability Report.