Annual report 2022: a year of contrasts for Credendo
The year 2022 was a difficult year for Credendo with the Russian invasion of Ukraine acting as a catalyst for a multitude of problems afflicting the global economy. Unfortunately, the wider ramifications of the war had a negative impact on our claims volumes and on our cautious provisioning, resulting in Credendo posting a loss for 2022 despite our annual results showing good underlying performance across most divisions. We also decided to completely exit the Russian market through the sale of our Russian subsidiary – a joint venture with Russian insurer Ingosstrakh, set up in 2009, in which we have a 67% stake. The sale process is ongoing.
The conflict not only affected our direct business in the region, but also had multiple repercussions on the global economy and political risks. Global economic and financial conditions deteriorated fast. Europe landed in an energy crisis, the global economy experienced a slowdown, inflation levels rose, and we saw a sharp monetary tightening. The end of cheap money combined with record-high debt levels and weakened macroeconomic fundamentals for many countries, paved the way for a potential wave of debt distress and restructuring. Against this difficult backdrop, we’ve seen countries begin to default on their debts.
Ghana’s failure to meet its debt obligations in December 2022 had a significant negative impact. Our volume of claims hit EUR 235.7 million last year, compared to EUR 11.2 million the previous year after restatement. In terms of provisions, Ghana’s foreign debt suspension together with provisions made for Russia, Ukraine and Belarus account for almost two thirds of the claims charge. Our net loss ratio stood at 73.2% this year compared to 11.9% in 2021.
Due to inflation and higher commissions for brokers because of increased premium volumes, our operating expenses were also higher last year. In terms of numbers, our net financial income stood at a loss of EUR 202.7 million last year, compared to a gain of EUR 124.4 million in 2021 and we posted an overall loss of EUR 271.5 million last year, compared to a profit of EUR 209.5 million posted the previous year.
In spite of these results, the numbers show a good underlying performance. Our insurance premium revenue increased to EUR 370.2 million, compared to EUR 319.2 million in 2021 after restatement and our equity base stands at a healthy EUR 2.7 billion. Even after losing the Russian and Ukrainian markets, our whole turnover short-term insurance business grew by 15% in 2022 and other product lines also performed well in 2022 and are expected to grow in 2023.
Other bright spots include the publication of our new Fossil Fuel Policy – for the energy transition from fossil fuel to clean energy – and the launch of the Credendo Green Package, which supports projects that have a positive environmental impact. Moreover, the majority of the provisioning put in place during the pandemic has been released.
We remain alert to the continuing global economic and geopolitical problems, but will keep supporting the trade ambitions of our clients with prudent risk underwriting. Despite uncontrollable global factors, we are confident that we can face the challenges ahead.