The African Aviation Pool generated a premium income US$5,896,189 in 2010 from US$5,613,967 the year before, representing a growth of about 5 percent, African Reinsurance Corporation, the managers of the pool states in its report to the 57th management board and 27th annual general assembly meetings.
The Pool was established by the African insurance Organisation (AIO) to promote exchange of reinsurance business among its members within the continent and it currently underwrites business from a number of African and international airlines. From January 1, 2011, its membership increased by two to 52 with a subscribed capacity of US$7,910,000 against US$7,610,000 in 2010.
The pool, however, recorded an underwriting loss of US$3,317,690 as against an underwriting profit of US$2,448,370 achieved in 2009. The high number and size of aviation losses experienced in Africa during the year 2010 were attributed to this. The losses included the Ethiopian Airlines and Libyan Afriqiyah Airlines crashes.
Equally, operating loss of US$3,924,854 was recorded for the period under review as against profit of US$2,219,577 recorded in 2009. The major losses contributed to the negative result.
The following large losses formed part of the total claims paid in 2010; Compagne Africaine D’aviation (CAA) overran runway in Goma, DRC on 19th November 2009 and US$420,000 was paid as claim; Compagne Africaine D’aviation (CAA) veered of runway at kinshasha airport on 2nd January, 2010 and a claim of US$560,000 was settled; Ethiopian Airline crashed on January 25, 2010 and US$3,588,247.10 was paid as claim; Libya Afriqiyah Airways crashed on May 12, 2010 and a claim of US$2,362,223.96 was settled.
A review of the financial position of the pool as at December 31, 2010 reveals that its gross underwriting capacity remained at US$17,500,000, while US$8,870,110 was recorded on members account as against US$12,794,964 registered the year before. This was explained by the large losses settled which depleted the amount.
On cedants’ account, accounts receivable stood at US$12,844,873 in 2010 compared to US$13,594,559 registered the year before. It was, however, added that the aggressive collection drive embarked upon by the managers is continuing.
The Pool’s bank balance as at 31st December 2010 stood at US$262,370 as against US$277,545 recorded during the same time the previous year. Although good progress was made in collections, unfortunately the several losses paid have eroded the bank balances, the managers of the pool lamented.
Although the pool recorded a loss in 2010 due to the spate of plane crashes during the year, it is envisaged that the next couple of years should record results capable of stabilising the accounts and pave way for real growth in the near future.
This optimism is based on the fact that the African aviation market is likely to follow the local content initiatives adopted by some countries in the oil sector where the growth and opportunities motivate local players to seek answers to local retention challenges.
While thanking members of the pool for their support both in good and challenging times, the managers of the pool, said it was looking forward to continued support and encouragement in due course.