The long-term insurance (LTI) industry in Namibia has demonstrated resilience amid global economic challenges, but its financial performance for the first quarter of 2025 reveals a stark contradiction: while total assets and solvency ratios improved, the sector suffered a staggering 189.7% quarter-on-quarter decline in profit before tax (PBT). This alarming drop, despite a year-on-year increase of 63.3%, underscores the pressures facing the industry, including reduced new policy uptake and rising claims.
According to the Namibia Financial Institutions Supervisory Authority (NAMFISA), the LTI sector’s total assets grew to N$85 billion as of 31 March 2025, marking a 1.5% increase from the previous quarter and a 13.9% rise compared to the same period in 2024. This growth was driven by strong performance in equity investments, reflecting the industry’s ability to navigate geopolitical tensions and trade disruptions. Excess assets also rose by 4.9% quarter-on-quarter and 20.4% year-on-year, reaching N$12.6 billion, while the solvency ratio improved marginally, signaling a robust financial position.
However, the sector’s profitability tells a different story. Profit before tax plummeted to N$1.2 billion, a 189.7% decline from the previous quarter, though it was up 63.3% year-on-year. This sharp drop was attributed to a significant reduction in new policies underwritten, which fell by 7.7% to 112,002 policies. Gross written premiums (GWPs) mirrored this trend, declining by 9.1% quarter-on-quarter to N$3.3 billion, despite an 11.9% annual increase. The slowdown in new business has raised concerns about the industry’s ability to sustain growth in the face of evolving consumer behaviour and economic headwinds.
Compounding the profitability challenge was a rise in claims, which climbed to N$2.6 billion, up 7.3% from the previous quarter and 8.2% year-on-year. NAMFISA attributed this increase to heightened claims activity, particularly for risk and funeral policies affected by the December holiday period, which delayed processing and payments. While the total number of policies in force grew by 2.2% quarter-on-quarter to 2,214,108—a positive sign—the decline in new policy uptake remains a critical issue for insurers.
The industry’s capital adequacy requirements (CAR) were met across the board, with all insurers complying with the regulatory thresholds set by the Long-Term Insurance Act of 1998. This compliance highlights the sector’s stability, but the profit decline suggests underlying vulnerabilities that could impact long-term sustainability.
NAMFISA’s broader Quarterly Statistical Report for 2025 paints a mixed picture of the non-banking financial sector. While the LTI industry grapples with profitability challenges, other sub-sectors such as retirement funds and medical aid funds showed stability. Retirement funds reported investments of N$262.8 billion with a funding level of 101.1%, while medical aid funds maintained a net surplus of N$229.7 million and grew their membership to 220,652 beneficiaries.
The microlending sector, however, emerged as a focal point for regulatory concerns. Despite a 13% year-on-year growth in its loan book to N$7.6 billion, microlenders accounted for 91.6% of non-compliant entities under NAMFISA’s supervision. Common issues included failure to submit regulatory returns, non-payment of levies, and disregard for remedial actions. Consumer complaints also surged by 77.4% quarter-on-quarter, with microlenders responsible for 59% of cases.
NAMFISA CEO Kenneth Matomola acknowledged the sector’s resilience but emphasized the need for continued collaboration between regulators and industry stakeholders to address compliance gaps and protect consumer interests. “We thank our regulated entities for their commitment to transparency and cooperation in safeguarding consumer interests and ensuring the long-term sustainability of the financial sector,” he said.
The outlook for the LTI industry remains uncertain. While asset growth and solvency improvements provide a solid foundation, the dramatic profit decline and reduced new business pose significant challenges. Insurers may need to reassess product offerings, pricing strategies, and operational efficiencies to regain momentum. For now, the sector’s ability to adapt to changing market dynamics will be critical in determining its trajectory for the rest of 2025.
For now, the long-term insurance sector stands at a crossroads—financially robust by regulatory measures but facing clear profitability challenges. How insurers navigate this complex landscape will determine not only their own fortunes but also the continued availability of quality insurance products for Namibian consumers and businesses. The coming months will reveal whether the industry can return to balanced growth or if more significant transformations will be required to restore sustainable profitability.