Page 22 - Continental Reinsurance 2022 Annual Report

20 2022 Investment Performance
Review and Report

C Re Plc contributed 53% to the group investment performance, (2021: 47%) of the total group return at 8.68% (2021: 7.10%)
yield, CRe Ltd Nairobi contributed 31% (2021: 31%) of the performance at 9.11% (2021: 8.47%) yield, CIMA contributed 11%
(2021: 16%) and Gaborone contributed 5% (2021: 5%) to the group total performance.

Analysis of return on investment
The chart and table below show the analysis of the contribution of the various asset classes to investment performance for the
period.

2% 1% 1% Income driver

3% 32% FGN Eurobond FGN Euro Bonds: 31.50% (2021: 15.26%)
5% 24% FGN Bonds FGN Bonds: 23.45% (2021: 19.52%)
8% Cash & Cash Equivalent CCE: 13.44% (2021:26.26%)
Mutual Funds Mutual Funds: 13.38% (2021: 14.06%)
11% Investment Property Others: 20.23% (2021:23.85%)
Corporate Bonds - Eurobond Fixed income: 87.55% (2021: 83.68%)
13% Equity
Treasury Bills
Statutory Deposit
Corporate Bonds - Local

Fixed income instruments (comprising of Treasury Bills, Sovereign bonds, corporate bonds, and BAM mutual fund which is 100%
fixed income) contributed 74.12% (2021: 57.42%) of the group investment return followed by placement with banks that
contributed 13.44% (2021: 26.26%); total at 87.55% (2021: 83.68%).

Equities contributed 3.16% from dividend incomes and capital gains from the redemption of the Plc mutual fund. Statutory
deposit detracted from our performance and contributed only 1.15% on a N1 billion asset. The interest on statutory deposit is still
very low at 4.72% per annum but was an improvement compared with the 2.5% in 2021.

Performance contributed by asset classes by region.

Lagos Gaborone Nairobi Douala Group

Asset class Weight Return % Weight Return % Weight Return % Weight Return % Weight Return %
(%) (%) Contr. (%) (%) Contr. (%) (% Contr. (%) (% Contr. (%) (% Contr.
Cash & Cash Equivalent to income to income to income to income to income
Statutory Deposit
Equity 26.61% 4.77% 16.73% 52.61% 5.02% 42.17% 10.93% 2.19% 2.83% 17.96% 5.04% 13.81% 22.83% 4.27% 13.44%
Investment Property 3.25% 4.82% 2.17% 0.00% 0.00% 0.00% 0.00% 0.00% 0.00% 0.00% 0.00% 0.00% 1.76% 4.82% 1.15%
Mutual Funds 2.59% 16.66% 5.96% 0.00% 0.00% 0.00% 0.00% 0.00% 0.00% 0.00% 0.00% 0.00% 1.40% 17.27% 3.16%
FGN Bonds 6.02% 2.72% 2.25% 0.00% 0.00% 0.00% 0.00% 0.00% 0.00% 48.07% 8.94% 65.60% 8.99% 6.90% 8.13%
FGN Eurobond 0.79% 0.00% 0.00% 0.00% 0.00% 0.00% 12.31% 36.64% 0.00% 0.00% 0.00% 8.09% 10.52% 11.38%
Corporate Bonds - Local 10.80% 23.70% 0.00% 0.00% 0.00% 27.62% 13.52% 34.67% 1.61% 3.53% 0.87% 16.91% 11.26% 23.45%
Corporate Bonds - Eurobond 18.55% 11.48% 41.86% 18.98% 7.77% 23.55% 24.04% 6.05% 25.86% 0.00% 0.00% 0.00% 30.92% 10.17% 31.50%
Treasury Bills 35.77% 11.67% 1.07% 2.51% 7.30% 2.92% 37.41% 0.00% 0.00% 0.00% 0.00% 0.00% 0.51% 10.35% 0.72%
Total 7.93% 5.81% 25.91% 7.58% 31.36% 0.00% 0.00% 0.00% 0.00% 0.00% 4.66% 7.92% 4.73%
0.66% 8.35% 0.46% 0.00% 0.00% 0.00% 0.00% 0.00% 0.00% 32.36% 3.99% 19.72% 3.92% 5.68% 2.33%
Table 6 5.64% 8.68% 100.00% 100.00% 7.83% 100.00% 0.00% 9.11% 100.00% 100.00% 7.34% 100.00% 100.00% 8.47% 100.00%
0.12% 0.00%
100.00% 100.00%

Portfolio performance constraints and remedies
a. Regulatory restriction on the free movement of funds across regions for investment. Some jurisdictions have below the

required capital adequacy thresholds, thus the restrictions. Capital growth to prescribed capital adequacy levels will allow
offshore investments. CIMA can only hold local currencies (Xof/XAF) or Euro and transfers are restricted.
b. Liquidity requirement vs collections – the need to maintain a certain level of liquidity. More robust and timely collections will
enhance liquidity and asset-liability matching enhanced by more profitable business. Some regions have aged receivables.
c. Pressure to release funds for quantum operating expenses. We plan to mitigate this by planning positive cashflows from
operations through, profitable business and increased timely collections and cost control/management.
d. Improved yields on fixed-income instruments in Nigeria and other regions. Cross-border investment opportunities are being
sought. Case in point being Tunis and Gaborone.
e. Lack of USD liquidity in some markets, namely Nigeria. USD assets had higher returns. We continue to preserve dollars and
obtained NAICOM attestation letters to allow for USD purchases in the official markets.
f. Risk-based solvency margins: high charges on some high-yield instruments (properties, equities) albeit carry illiquidity risk.
g. Non-tradable assets in our portfolio. These are some very old Lagos mutual funds (N224.5 million) and some unquoted equities
counters (GThomes and Food Concept figure 3 and 4). We shall aggressively follow up.