to the most recent statistics on insurance and pensions
released by the Central Bank, total premiums in the sector
had totalled some $6.05 billion for 2004, contributing to
eight per cent of GDP. This represents the dollar amount
of risks transferred by business and individuals to insurers
in that year.
One company alone had sold more than half of that in long
term business alone, with a total net premium income in
excess of $3.3 billion. Its major competitor had written
net premium income for that year totalling $0.52 billion.
Risk transfer and long term savings in insurance companies
are governed by a statutory fund, which under the law, safeguards
the policy holders.
The total amount of statutory funds maintained by life insurance
companies in 2004 was in excess of 16 billion dollars. Of
course this figure represents more than the liability for
The sector had shown a growth of some nine per cent, within
which the individual annuity portion had itself grown by
some 12 per cent.
Thus we have a factoid that more money was being put into
individual savings for the long term, in life insurance
Specifically such savings under the annuity laws will be
paid out to those investors in the form of a pension.
Former United States Federal Reserve Chairman Alan Greenspan
warned for the third time last week, that the US economy
was heading for a recession, by the years end.
US economic growth for 2006 was recorded as 3.5 per cent
(for June 2006), while their inflation statistic by September
2006 was a mere two per cent.
Our growth was seen as some 12 per cent, with food price
inflation at 27 per cent. This figure pushed headline inflation
to nine per cent.
So what does US statistics have to do with us? What they
do and what happens to their economy ripples downward to
reach us several months later.
This is obvious from an important question. From where do
we buy our food?
The second question is what is import cover? Simply put
import cover is a measurement of the amount of gross financial
reserves we have as a country to import the goods that we
need to import.
The official statistic is that we have enough money to carry
us for nine months.
Comparatively, that is not a bad position. But what happens
when the goods we import experience spiralling price increases?
Will the effect be that of pushing the price of food, the
dominant import, even higher, and driving inflation into
The simple answer is you need to second guess the experts,
but cover your water barrel with good cloth.
For the time being, growth in long term savings by 12 per
cent may prove inadequate to the task and the easy answer
is to trigger another anomalous year in savings up to 50