Mohamed Jean Innocent COMPAORE, General Manager of Sunu Assurances IARD Burkina Faso, Chairperson of the Professional Association of Insurance Companies of Burkina (APSAB)
“In 2020, the total amount of investments made by insurance companies amounted to XOF 221.36 billion, this represents a 10% increase compared to 2019.”
Mohamed Jean Innocent COMPAORE became the chairperson of APSAB in July 16, 2021. Managing Director of SUNU Assurances IARD Burkina Faso since 2018, this Company Administrator has been working in the insurance sector since 1994. In this issue of La Tendance, he kindly answered our questions on the involvement of insurance companies, especially those of Burkina Faso on the Government Securities Market.
Insurance companies mobilize a lot of money in their activities, what is the turnover in Burkina for 2019 or 2020?
In 2021, the insurance market in Burkina Faso is composed of seventeen (17) companies, including eight (08) non-life insurance companies, seven (07) life insurance companies, one micro-insurance company and one reinsurance company. Generally speaking, we can say that the insurance sector in Burkina Faso is doing well.
In 2020, the turnover of the insurance sector in Burkina Faso passed the mythical XOF 100 billion mark to reach XOF 108 billion, i.e. a 15% increase. With this performance, Burkina Faso’s insurance sector is ahead of Gabon’s and becomes the 4th in the CIMA zone after Côte d’Ivoire, Cameroon and Senegal. Life insurance represents 43% of the market share. The production of the first quarter of 2021 is estimated at XOF 36.13 billion, i.e. an increase of 18% compared to the same period in 2020.
How do insurers make their funds “work”?
First of all, it should be said that the purpose of insurance is to cover an insured person (natural or legal) against a loss they may experience. The aim is to protect oneself as much as possible against hazards and possible damage so that, in the event of their occurrence, they can cause as few problems as possible by generating compensation systems if necessary.
In this context, insurance companies collecting savings have become a key player in the capital markets. The funds collected finance a large part of the companies and the debts of the States. Thanks to the funds collected, insurance companies, in compliance with CIMA rules, intervene on regulated markets to finance the economy by subscribing to the Treasury bills and bonds of WAEMU States, accompany banks and the entire financial system (financial institutions, meso-finance, micro-finance, etc.) by offering them term deposits, loans or subscribe to the bonds of private companies in case of a public offering.
In this respect, are insurance companies present on the Government Securities Market?
As mentioned in the previous question, insurance companies have a strong presence in the Government Securities Market. The legislator of the insurance business (CIMA) has also required that a minimum of 15% of the regulated commitments of insurance companies be invested in the bonds of member States. As a result, insurance companies are among the institutional investors. They collect savings and invest them in the economy.
In 2020, the total amount of investments made by insurance companies amounted to XOF 221.36 billion, this represents a 10% increase compared to 2019. In these investments, we find: bonds, shares, real estate, loans, bank deposits and other assets that are residual.
For 2020, total bonds represented 37% of insurance companies’ investments. Government bonds accounted for 88% of the bond portfolio held by insurance companies in Burkina Faso, i.e. XOF 71.66 billion.
Is this an attractive market for insurance funds? Why is this so?
The Government Securities Market is very attractive, as it offers investors the quality of the signatures of the States making up the Union, a diversity of instruments on offer, a variety of maturities, a generally unbeatable interest rate and a systematic return on investment thanks to advantageous taxation and no default.
