Total investment assets of the insurance industry declined slightly, according to the 2024 Financial Stability Review.
The decline reflected market volatility, portfolio rebalancing, and cautious investment postures following the Domestic Debt Exchange Programme.
According to the report, the life segment continues to dominate the industry’s investment holdings, accounting for approximately GH₵6.7billion, compared to GH₵3.1 billion held by the non-life segment.
The report pointed out that increased allocations to listed stocks, fixed deposits, and investment properties signal a search for yield and greater asset diversification. However, these shifts also introduce new risk considerations, particularly equity price volatility and property valuation uncertainty in an evolving macroeconomic environment.
“From a financial stability perspective, the evolving investment strategy reflects both strength and fragility. On the one hand, the reduced concentration in government securities enhances resilience to sovereign risk. On the other hand, increased exposure to equities and real estate heightens vulnerability to market cycles, especially under adverse economic scenarios”, the report stressed.
NIC’s Role in Guiding Assets Diversification Remains Crucial
On the other hand, the report said the NIC’s role in guiding the asset diversification and the search for yields of the insurance industry remains crucial.
By strengthening investment guidelines and embedding risk-based capital incentives, it said the NIC ensures that investment decisions enhance long-term solvency and financial stability.
“Additionally, as insurers adapt to the IFRS 17 era, where asset-liability matching and fair value measurement gain prominence, their investment decisions will no longer be purely a search for good returns but will become central to demonstrating both solvency strength and policyholder protection”, it alluded.
Ultimately, the report concluded that the insurance industry’s ability to balance yield generation with risk resilience will be a key factor in the industry’s ability to contribute meaningfully to Ghana’s overall financial stability.
DISCLAIMER: The Views, Comments, Opinions, Contributions and Statements made by Readers and Contributors on this platform do not necessarily represent the views or policy of Multimedia Group Limited.
DISCLAIMER: The Views, Comments, Opinions, Contributions and Statements made by Readers and Contributors on this platform do not necessarily represent the views or policy of Multimedia Group Limited.
