Auditors flag insurance valuations and property assets as key risks, but find no material misstatements in Botswana Insurance Holdings’ annual results
GABORONE, Botswana – 29 May 2026 – Botswana Insurance Holdings Limited, the country’s largest listed insurer, has received a clean audit opinion for the financial year ended 31 December 2025, with global auditors PricewaterhouseCoopers confirming that the group’s financial statements “give a true and fair view” of its position and performance.
The independent auditor’s report, signed in Gaborone on 22 May 2026 by PwC partner Rudi Binedell, covers both the consolidated results of BIHL and its subsidiaries as well as the separate company financials. For investors, the unqualified opinion means the P26.68 billion balance sheet and the group’s reported profits can be relied on for decision-making, with no material errors or fraud detected during the audit.
Clean opinion, complex business
An “unqualified” or clean audit is the best outcome a listed company can receive. It tells shareholders and regulators that, after extensive testing, the auditors believe management’s numbers are free from material misstatement. PwC conducted the audit under International Standards on Auditing and in line with the International Code of Ethics for Professional Accountants, which applies to public interest entities in Botswana.
BIHL’s business is not simple. The group consists of the holding company, seven directly held subsidiaries, nine indirectly held subsidiaries, two joint ventures, five associates and twelve collective investment units that are consolidated into the group results. That structure covers life insurance, asset management, property investments and reinsurance. Because of this complexity, PwC said it “tailored the scope of our audit” and performed full-scope audits on all components considered consequential to the consolidated statements. Where other PwC network firms performed work, the Botswana audit team supervised and reviewed it to ensure sufficient evidence was obtained.
Materiality set at P26.68 million
To focus their work, auditors use a “materiality” threshold – the point at which an error would influence an investor’s economic decisions. For BIHL, PwC set overall group materiality at P26,680,000. That figure represents 5% of the consolidated average profit before tax over the current and two preceding financial years.
PwC chose profit before tax as the benchmark because it is “the benchmark against which the performance of the Group is most commonly measured by users and is a generally accepted benchmark.” The three-year average was used to smooth out the cyclical nature of insurance and investment returns, which can swing profitability from year to year. The 5% rule of thumb is consistent with quantitative thresholds used for other participants in the insurance sector.
Three key risks dominate the audit
While the opinion is clean, PwC is required to highlight “key audit matters” – the areas that involved the most auditor judgment and carried the highest risk of misstatement. For BIHL’s 2025 audit, three stood out.
1. Valuation of insurance contract liabilities and reinsurance assets
This is the biggest number on BIHL’s balance sheet. At 31 December 2025 the group held insurance contract liabilities of P8.01 billion, down from P8.397 billion in 2024. There were no insurance contract assets, compared to P219 million in 2024. Reinsurance contract assets stood at P11 million and reinsurance liabilities at P66 million.
These liabilities are measured under IFRS 17: Insurance Contracts, which became mandatory for insurers globally. BIHL uses the general measurement model for individual life risk and guaranteed annuity portfolios, and the premium allocation approach for group scheme business. Reinsurance is measured under the general model unless eligible for the simpler approach.
The challenge for auditors is that the “present value of fulfilment cash flows” depends on assumptions about events decades into the future. PwC noted “significant estimation uncertainty” requiring expert judgment embedded in complex actuarial models. The most sensitive assumptions relate to mortality and morbidity rates, policyholder persistency including lapse and surrender rates, future maintenance expenses, discount rates, inflation and the risk adjustment for non-financial risk.
The contractual service margin, which represents future profit to be earned as services are provided, stood at P1.232 billion at year-end, up from P1.175 billion in 2024. Changes in assumptions directly impact how much of that margin is released to profit each year.
To address this risk, PwC brought in actuarial specialists. They assessed the valuation methodology for compliance with IFRS 17, challenged key assumptions by comparing them to external data and the group’s own experience analysis, and tested the reasonableness of the contractual service margin build-up. They also evaluated the risk adjustment calculation and reconciled model outputs to the financial statements. After this work, PwC stated: “We did not raise any material exceptions with respect to our audit of the insurance contract liabilities.”
2. Valuation of unlisted corporate bonds
BIHL held P2.551 billion in unlisted corporate bonds at year-end, classified as financial assets at fair value through profit and loss. These bonds do not trade on an active market, so they are classified as “Level 3” under IFRS 13 Fair Value Measurement. That means their valuation depends on management models and unobservable inputs.
The key assumptions are benchmark risk-free yield curves, credit spreads reflecting issuer credit quality, and liquidity premiums. Because these inputs are subjective, PwC treated this as a key audit matter. The audit team used financial instrument specialists to assess whether the valuation models complied with IFRS 13 and properly reflected the contractual terms. They challenged assumptions by comparing them to observable market data where available and tested the accuracy of data inputs against contracts and pricing supplements. Independent recalculations were performed to see if management’s values fell within an acceptable range.
Again, PwC concluded: “We did not raise any material exceptions with respect to our audit of the unlisted corporate bonds.”
3. Valuation of investment properties and related unlisted equity
Property makes up a significant portion of an insurer’s investment portfolio. BIHL held investment properties of P455 million at fair value under IAS 40, down slightly from P475 million in 2024. It also held P730 million in unlisted property companies and partnerships, where the fair value is derived from the underlying properties. All these assets are Level 3.
Qualified external valuers determine the fair values using an income capitalisation approach and, in some cases, a comparative approach. The critical inputs are capitalisation rates, rental income, rental outgoings and market comparables. The limited number of comparable property transactions in Botswana adds to the judgment involved.
PwC tested the independence and qualifications of the external valuers, obtained written confirmations, and tested the capitalisation rates by discussing how they were determined and comparing them to transactions of comparable properties. Rental income was agreed to tenancy agreements, and outgoing rates were compared to listed property companies in Botswana. For the comparative approach, the auditors checked that price per square metre was based on recent transactions and correctly applied.
PwC noted that during procedures they identified matters for follow-up with management and valuers, but obtained appropriate explanations and corroborating evidence to support the valuations.
Governance and going concern
The auditor’s report also outlines responsibilities. Directors are responsible for preparing financial statements that give a true and fair view and for assessing the group’s ability to continue as a going concern. PwC’s responsibility is to obtain reasonable assurance that the statements are free from material misstatement and to issue an opinion.
On going concern, PwC concluded on the appropriateness of the directors’ use of the going concern basis of accounting and, based on audit evidence up to 22 May 2026, found no material uncertainty that would cast significant doubt on BIHL’s ability to continue operating. The auditors note, however, that future events could change that assessment.
PwC also confirmed its independence from the group in accordance with the IESBA Code and Botswana’s ethical requirements. The firm communicated with directors on audit scope, timing and significant findings, including any deficiencies in internal control.
What this means for shareholders
For BIHL shareholders, the clean audit removes one major source of uncertainty ahead of the annual general meeting. The P8 billion insurance liability valuation remains the single largest judgment area, but PwC’s use of actuarial specialists and the absence of material exceptions should reassure investors that IFRS 17 has been applied correctly.
The P2.55 billion unlisted bond portfolio and P1.185 billion property portfolio will continue to attract scrutiny because Level 3 assets rely on models rather than market prices. However, PwC’s detailed testing of inputs and recalculations suggests the valuations are reasonable based on current market conditions.
The drop in insurance contract liabilities from P8.397 billion to P8.01 billion year-on-year, and the increase in contractual service margin, will be key talking points when BIHL releases its full financial results. Those numbers will show how new business, assumption changes and the release of profit margins translated into bottom-line earnings for 2025.
Looking ahead
The auditor’s report is only one part of BIHL’s annual reporting package. The full consolidated and separate financial statements, which run to 183 pages, include the statements of financial position, profit or loss, changes in equity, cash flows and detailed notes on accounting policies. PwC’s opinion should be read together with those statements, which are available from BIHL’s registered office in Gaborone.
With the audit signed off, attention now turns to management’s commentary on investment returns, claims experience, and the impact of Botswana’s economic environment on policyholder behavior. For a market where insurance penetration is growing and regulatory requirements under IFRS 17 are still bedding down, BIHL’s clean audit sets a benchmark for transparency.
As partner Rudi Binedell and the PwC team conclude, the financial statements present fairly the financial position of Botswana Insurance Holdings Limited and its subsidiaries. For investors holding BIHL on the Botswana Stock Exchange, that is the strongest assurance the numbers can provide.