Page 17 - Continental Reinsurance 2022 Annual Report
P. 17
2022 Investment Performance Review and Report 15
1. OUR INVESTMENT OBJECTIVE: by continued policy interventions, as well as credit
Our key investment objectives in managing the expansion to the private sector.
company's financial assets are to ensure that as a
reinsurance company, we preserve the company's The data available on key macroeconomic
capital, and can meet current and future claims indicators propose that output growth will
and other obligations while maximizing total continue for the rest of 2022 but may occur at a
return and reducing exposure to investment risks. much-slower pace than earlier anticipated, in the
light of unfolding domestic and external shocks to
Accordingly, the principal goal of our asset the economy. The domestic shocks are derived
management strategy is to safeguard the assets from the persisting insecurity inhibiting economic
and match the liability profiles of the company and agents; rising cost of debt and debt servicing;
make funds available to support reinsurance deteriorating fiscal balances; increased spending
obligations, while at the same time ensuring that as the 2023 general elections approach; and
current operating cash in-flows are adequate to continued uptrend in inflationary pressure. The
meet the current year operating obligations. Nigerian economy is forecast to grow in 2022 by
Investments are managed in line with the 3.30 per cent (CBN), 3.20 per cent (IMF) and 4.20
following compliance guidelines: per cent (FGN).
National Insurance Commission (NAICOM) In November 2022, on a year -on- year basis, the
guidelines. inflation rate was 21.47%. This was 6.07% points
Insurance Regulatory Authority (IRA) and higher compared to the rate recorded in
NBFIRA guidelines. November 2021, which was (15.40%). This
Board-approved policies; and indicates that the inflation rate increased in the
Risk Management: Portfolio Investment month of November 2022 when compared to the
objectives of Assets and Liability Matching in same month in the preceding year (i.e., November
line with the currency and tenor of our 2021). This increase can be attributed to the
Liability profile and Capital Adequacy. increase in the cost of importation relating to the
consistent currency depreciation and the general
We use multiple investment instruments to increase in cost of production. The inflation rate
maintain sufficient liquid resources needed to for the month of November 2022 was 1.39%, this
meet reinsurance claims and other operational was 0.15% higher than the rate recorded in
and strategic investment cash outflows. October 2022 (1.24%). This means that in the
Therefore, in executing investment activities, we month of November 2022, the general price level
engage only in operations designed to achieve a was 0.15% higher compared to October 2022.
high-quality and liquid investment portfolio. The increase in the monthly inflation rate can be
attributed to the sharp increase in demand usually
2. MACRO-ECONOMIC ENVIRONMENT experienced during the festive period.
The Nigerian Economy Nigeria Naira has consistently been under
depreciation pressure due low liquidity to meet
Information from the National Bureau of Statistics the rising demand for USD. Naira depreciated year
(NBS) highlighted that the Real Gross Domestic to date in the Investor and Exporter window by
Product (GDP) grew by 2.25% (year-on-year) in 12.22%, to close the year at N461.5/USD from
the third quarter of 2022 which declined N435/USD as of 31st December 2021. Exchange
compared to 3.54% in the second quarter of 2022 rate in the parallel market was around N750/USD
and 4.03% in the third quarter of 2021. The as at the end of the year.
reduction in growth is attributable to the base
effects of the recession and the challenging The FX reserves declined by circa USD3bn from
economic conditions that have hindered USD40.21 billion as at 31st December 2021 to
productive activities. However, the economy has USD37.08 billion as at the end of December 2022
maintained continuous growth for eight as the CBN continued to intervene via different FX
consecutive quarters, following its exit from the windows (Invisibles, IEW, SMIS retail, SME). The
recession in 2020. This consistent positive reserve, which was around $40.21 billion at the
performance was driven largely by the sustained end of last year suffered a decline despite higher
growth in the non-oil sector, particularly the global oil prices.
services and agricultural sub-sectors, supported
