Limited investment offers, regulations more than 20 years old, taxation… insurers present limits to their participation in the stock market.
To date, only the Gabonese reinsurance company is present on the Central African Stock Exchange (BVMAC). The countries of the sub-region, however, rely on institutional investors such as insurance companies who have long-term savings to boost the financial market. But listening to them, several barriers must be lifted to see them mobilize. The international conference on insurance and financial markets held in Douala from October 17 to 18 was an opportunity to address this issue.
During this event organized by the Inter-African Conference of Insurance Markets (Cima) in partnership with Financia Capital and the Bridge Consulting & Partners Firm, insurance companies did not hide the limits to the investment opportunities that are presented. According to insurers, investment offers in the CIMA zone are limited despite the establishment of organizations such as BRVM, BVMAC, COSUMAF. They believe that companies that could interest insurance investors are not yet present on the stock market. However, the potential exists. Investments made by all companies operating in the CIMA space amounted to 2,747.94 billion F CFA in 2020 compared to 2,506.78 billion F CFA in 2019, an increase of 9.6%. However, these investments are dominated by bank deposits (35.1% bank deposits, compared to 14.0% real estate assets and 0.6% advances on life contracts). For the Association of Insurance Companies of Cameroon (ASAC), these are consequences of the regulations on investments which date back more than twenty years. This situation creates very undiversified investment opportunities as well as low profitability (on average less than 5% net).
One of the elements highlighted in the regulatory framework concerns the solvency regime to which companies in the CIMA zone are subject. The restrictive list of investments admitted to represent regulated commitments sets in particular between 15% and 50% for bonds issued or guaranteed by a CIMA member state. 40% for other bonds and stocks; 40% for real estate; 10% for other guaranteed loans; between 10% to 40% (35% in life insurance) for current accounts or cash on hand. For insurers, it is necessary to update the catalog of investments accepted to cover regulated investments which is more than 20 years old. Taxation is also cited as a major obstacle. “ Stifling taxation constitutes a double punishment for the market. It increases the cost of insurance (insurance premium) and therefore contributes to the stagnation of market turnover. In addition, this taxation does not subject all those involved in the collection of savings to the same requirements as insurance companies. », notes Thierry Kepeden, president of ASAC.
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“A study is underway to develop taxation on the financial market”
“Together with the Central Bank, there is a study underway to develop taxation on the financial market. The project advances. The consultants who would be selected will, after having read the financial market texts, develop a roadmap for each instrument and all the stakeholders involved here. Whether it is the financial market segment, whether it is the investor segment, insurance companies, banks will be challenged. At the end of the day, taxation must be both attractive and encouraging. There is no financial market without this very decisive aspect for developing a sector like ours. As of December 31, 2022, we recorded 532,000 bonds transacted for a modest sum of 1.4 billion FCFA raised. This figure should concern insurers. The question is what do the Cosumaf texts offer insurance companies? Financial market texts have taken into account new players and new products. It is in this that Cosumaf has strengthened its prerogatives and powers in terms of the protection of savings. New instruments on collective management, alternative investment funds, financial securities, digital finance. So we observed different trades, not just insurers, and we tried to see how the financial market can provide the beginning of an answer to their problems. For the insurance sector, the financial market offers opportunities to raise capital to finance growth. You strengthen the visibility of the company both locally and internationally. »
