Over the past 23 years, Donewell Insurance has established a sturdy reputation as a most reliable mid-sized general (non-life) insurer in Ghana. Wholly indigenous owned, its shareholding is diverse, comprising the Methodist Church, institutional investors, trade associations and individuals.
And over the years, the company has held its own against the increasingly fierce competition thrown up by Ghana’s rapidly expanding insurance industry, lending credence to its corporate slogan which goes “If it must be done, it must be Donewell.”
Since 2015 however, Donewell has raised both its institutional capacities and its actual performance to entirely new levels.
In March 2015, the company appointed the vastly accomplished Seth Aklasi as its Chief Executive Officer as part of an overhaul of its management team, which has since been followed by a major recapitalization exercise which has enabled it to significantly exceed the new GHc15 million minimum capital level for general insurance firms, insisted on by the National Insurance Commission.
All these have been accompanied by an upgrade of the company’s processes and procedures, its product and service delivery channels, and indeed its actual strategic positioning.
The result is that, Donewell has been re-engineered into one of Ghana’s leading general insurers in terms of technical underwriting competence, financial solidity and its sheer ability to meet the risk management needs of clients; and most importantly in terms of its ability to meet the risk management needs of customers, institutions, enterprises and households alike, in a most efficient and cost effective manner.
Instructively, the company’s intensified focus on risk management, on its own behalf as well as that of its clients, has vastly improved the quality of its insurance policy underwriting, which has translated into unparalleled protection of its clients against institutional, business and household risks.
Improved quality of corporate governance and financial prudence has similarly translated into operational efficiency levels that are higher than those being achieved by the rest of Ghana’s general insurance industry.
This is evidenced by the fact that; for the 2015 financial year, Donewell’s net claims incurred, of 2.395 million, were actually 17.5% lower than the GHc2.904 million incurred in the previous year.
Even more instructively, this gave the company, in 2015, the lowest claims ratio in the general insurance industry when measured against the premiums it collected, at just 16%. In 2014, the company’s claims ratio of 22% was the 4th highest in the industry.
Similar exemplary efficiency in operational management enabled Donewell to deliver a management expenses ratio of 42% in 2015, the 2nd lowest in the industry, even though in actual terms management expenses grew by 7.2%, to GHc6.141 million, up from GHc5.731 million in 2014.
This gave Donewell a combined ratio, inclusive of both the claims ratio and the management expenses ratio, of just 58% in 2015, the lowest in the industry and a reduction from the 66% incurred in 2014.
Prudently, Donewell has accompanied its rapidly rising business volumes with a more conservative financial stature and this inevitably led to a temporary lag in profitability growth.
In 2015, pre-tax profits fell by 11.2% to GHc5.779 million, down from GHc6.508 million in 2014. This was in part because of a 36.4% decline in investment income from GHc2.709 million in 2014 to GHc1.724 million last year. This watered down a dramatic 136.8% increase in the company’s underwriting profit, to GHc3.941 million, from GHc1.664 million in the previous year.
The decline in investment income was the inevitable short-term consequence of an adjustment in the structure of the company’s investment portfolio towards greater conservatism and therefore safety.
It is instructive that investment income is now on the rise again, bringing in GHc1.525 million in the first half of 2016 alone, and indicating that income from this source for the whole year will reach a record high.
Indeed, unaudited management accounts for the first half of 2016 show that, Donewell is reaping the rewards of the solid foundation it built in 2015.
Last year’s recapitalization resulted in a dramatic increase in the company’s balance sheet size, which in turn paved the way for much bigger business volumes.
During 2015, Donewell’s total assets grew by 20.1% to GHc31.244 million, up from GHc26.022 million, on the back of a 43.8% increase in shareholders’ funds from GHc11.244 million to GHc16.166 million, resulting from the company’s recapitalization through a limited rights issue to its existing shareholders.
The company’s growth continues to accelerate; by the middle of this year, its total assets had risen further to GHc39 million.
Prudently, Donewell has ensured that, a bigger asset size has been accompanied by more liquidity with a view to making sure it is always well-positioned to meet genuine claims quickly, whenever they arise.
In 2015, the company increased its most liquid assets in the form of cash and cash equivalents two and a half times over, to reach GHc1.738 million, up from GHc700, 000 at the start of the year.
By the middle of 2016, this had been raised even further to over GHc2.158 million.
Importantly, this has been accompanied by a near doubling of very liquid investments in debt securities from GHc8.281 million as at the end of 2015, to GHc14.165 million by the middle of 2016 which combined with its large cash and cash equivalent assets, ensures that the company is always perfectly positioned to meet claims, and indeed any other financial obligations as they arise.
Where the requisite documentation is fully made available by the customer, claims are paid promptly.
Interestingly however, the company’s increased business volumes, although accompanied by an excellent capacity to meet claims arising, are coming as claims themselves are on the decline.
This is the result of the company’s emphasis on helping its customers to manage their risks prudently, rather than simply leaving customers to incur claims that could have been avoided in the first place, through better risk management and then meeting those claims when they arise.
Here, the company employs thorough pre-inception surveys which assess the operating risks facing the client and recommend how they can be reduced or actually eliminated.
Donewell’s customers are finding this approach to be refreshingly effective, and combined with the company’s focus on close relationships with its customers and the sheer convenience of the product and service delivery channels it offers, are giving those customers levels of satisfaction which they hitherto thought were not possible to achieve with regards to insurance.
For them, insurance cover is now well worth the cost, rather than something to be entered into with reluctance and where possible avoided, as used to be the perception.
It is instructive that a major driver of Donewell’s rapidly increasing business volumes are the referrals the company is getting from its existing customers, recommending it to potential new ones that they know, because of the satisfaction they derive themselves from doing business with the company.
This is being accompanied by deliberate well-conceived strategies to expand its product marketing channels. Under the revamped management, Donewell has greatly increased its interactions with insurance brokerage firms and consequently, the business volumes it gets through them, even as it has significantly expanded its team of sales agents.
This is resulting in lots of new business, particularly in the areas of its transport, marine, household, motor, fire and accident insurance portfolios.
The result has been a solid 36% growth in the company’s gross premiums in 2015, which grew to GHc20.357 million, up from GHc14.970 million in the previous year. But even this superlative performance only reflects the beginning of a much bigger rise in Donewell’s business volumes going forward.
Unaudited management accounts for the first half of 2016 reveal gross premiums of GHc17.481 million, which almost matches the quantum of gross premiums generated in the whole of 2015.
Importantly, recapitalization has enabled Donewell to cut its finance costs dramatically, by replacing debt with equity.
In 2015, the company incurred finance cost of GHc604, 365, up from GHc541, 104, the result of servicing bank facilities. During the first half of 2016 however, there were no finance costs incurred whatsoever.
The combination of rapidly growing premium and investment income and a tight lid on growth of management expenses, coupled with higher quality underwriting due to better risk management for customers, is translating into an upsurge in profitability.
To be sure, even though the restructuring of its strategies and operations led to a decline in profits in 2015, the company still delivered the 4th highest returns on equity, at 21.4% and the 3rd best returns on assets, of 11.1%.
This is getting even better. For the first half of 2016, Donewell’s management accounts show a pre-tax profit of GHc8.116 million and a profit after tax of GHc5.572 million, these profit levels already exceeding what was earned for the whole of 2015.
Behind all these achievements are a revamped management team led by a Managing Director whose appointment and subsequent leadership has been crucial to the company’s vastly improving fortunes, and indeed those of its customers.
This is Seth Aklasi, who has brought nearly two decades of exemplary professional expertise, experience and accomplishment to bear at Donewell.
Armed with a Master’s degree in Insurance and Risk Management from Cass Business School, London, Aklasi is an Associate of the Chartered Insurance Institute, London.
His expertise spans several key areas of insurance including general insurance operations, ethical underwriting, claims administration, reinsurance, high level marketing and specialist energy underwriting.
Over the past two decades, he has worked in various capacities and levels with Enterprise Insurance, International Energy Insurance, and most lately as Managing Director of Priority Insurance.
Thus, Donewell’s improved ways of doing things and its stronger capital base are proving immensely beneficial to both its customers and the company itself.
And so that slogan, “If it must be done, it must be Donewell” deserves to be changed somewhat to reflect a new reality: “If it must be done best, it must be Donewell.”
By: Toma Imihere/Editor Financial Post