Audit firm, Deloitte, has advised insurance companies to explore alternative investment avenues as a safeguard against potential impairment losses resulting from the impact of the domestic debt exchange program.
In their 2023 Africa Insurance Outlook Update, Deloitte stressed the importance of insurance companies capitalizing on regulatory interventions to mitigate these potential losses.
They emphasized that it is evident that insurance companies may face enduring financial losses in the long term.
“While the programme is expected to alleviate the country’s debt burden, it is also likely to impair the return on investment for insurance companies. Insurers are encouraged to take advantage of the regulatory interventions and explore alternative investment choices to boost returns,” the report said.
It said, “Again, it is anticipated that the tradability of the Old Bonds will be restricted, reducing liquidity and potentially affecting the ability to pay claims.”