Rwanda Stock Exchange (RSE) has advised insurers to mitigate their losses by venturing into long term capital investment opportunities available on the Rwanda Capital Markets.
This comes days after the Rwanda Association of Insurers (ASSAR) announced a two phase 100 percent increase on premiums by 2019, citing losses and possible collapse of the sector.
“By increasing prices they (insurers) must also increase equity. This is the only solution to mitigate one from being indebted, just as we see with other companies,” Celestin Rwabukumba the CEO of Rwanda Stock Exhange told KT Press in an exclusive interview – Monday.
The current rate of indebtedness is estimated to be at over 70 percent and this has seen some local companies closing business despite the existing ease of opening a business, doing business, and subsequent increase in new registered business.
Insurance companies are required to raise at least Rwf1billion as capitalization and the numbers of local and regional companies operating in Rwanda has increased to 16 in June 2017 despite a low uptake of insurance services- now at less than 3percent.
The sector’s total assets were at Rwf366.5 billion by June 2017, indicating a year-on-year growth of 10 per cent, but with losses of more than Rwf6billions annually.
For Rwabukumba, this is enough capitalization that can be invested into equity which will enable insurers to make more money, instead of depending on bank loans which in turn require paying a painful interest.
“Investing in stocks is sure and patient money which accumulates with time and doesn’t require one to worry because it’s more people and more sources,” Rwabukumba said.
In the meantime, on the Rwanda stock market, on both the index and all shares remained unchanged to close at 134.97 and 133.42 respectively.