Zimbabwe » Glossary

A procedure whereby a policy is issued with a policy date prior to the date of execution of the policy. This may occur when an insured’s needs change and he or she exchanges an old policy for a new one with a date prior to exchange.

A debt that is written off and deemed uncollectible.

An investment company that invests in stocks and bonds. The same as a balanced mutual fund.

Banker's acceptance is a bill of exchange drawn on and accepted by a bank. The accepting institution guarantees payment of the bill.

For the purposes of BARRA analysis, this is the All Share Index.

The total of a ceding company’s premiums to which a reinsurance premium rate is applied to produce the reinsurance premium.

One-hundredth of a percent. Basis points are used to express concepts such as expenses and yields that are less than 1%, e.g. 1% equals 100 basis points.

An investor who believes market prices for shares, bonds, etc are going to fall. A bear trend is a downward trend.

A persistent and prolonged decline in prices.

Words used to describe a pessimistic investor attitude.

The psychological biases that impact on decision making. Behavioural finance assists in understanding some of the irrational choices investors frequently make.

A standard of measurement used to evaluate the performance of a portfolio e.g. an index or the aggregate performance of a collection of comparable portfolios

A person named in an insurance policy to receive all or part of the benefits provided by the policy upon the death of the insured. The beneficiary can, under certain circumstances, be the insured’s estate, a creditor, or a corporation.

The amount payable by the insurer to a claimant, assignee, or beneficiary when the insured suffers a loss covered by the policy.

A person appointed by a pension fund in terms of an (pension fund) administration agreement whereby the members of the Board of Management delegate their functions, on behalf of that pension fund to administer the income and expenditure of such fund, the safe custody of the assets of the fund, the disposition of benefits defined in the rules of the fund, and all other administrative functions such as registration of rule amendments, provided such administration should not include control over the assets of the fund other than operating a banking account in the name of the fund or the safe custody of documents of the fund.

Includes all amounts paid or accrued in terms of policy contracts to the persons entitled to those benefits.

To award something to someone by means of a Will (to give).

A statistical measure of the market risk of an investment. A positive beta implies that an investment is positively correlated with the market and will thus tend to move in the same direction as the market as a whole. A negative beta implies that an investment is negatively correlated with the market and will tend to move in an opposite direction as the market as a whole. The size of the absolute value of beta indicates how big this move will be, e.g. a beta of –2 implies that the investment will tend to fall by 2 units for every unit the level of the market rises. The level of the market is usually measured by an index representative of the market as a whole. Formally, beta is defined as the covariance between the market returns and the investment’s returns divided by the variance of the market returns.

The amount by which the insured will benefit when lost or damaged property is restored into better condition or through replacement. Many personal lines policies include new for old clauses.

This is an investment of a very short term, where the investor buys the right to receive a specified amount of money at a specified date.

This is a bill that arises out of the sale of goods on credit. The bill for the amount owing is then sold to a bank at a discount to face value, after which the bank guarantees repayment and sells it into the market where it becomes a tradable security.

An authority issued by an insurer to another party to accept insurance on its behalf.

A process combining various portfolios which is either system driven or achieved entirely by human judgment.

Insurance against accident, illness and death of horses

A good-quality listed company with a proven track record. Implied in the term blue chip is that the company has been around a long time, has consistently made good profits and is among the largest companies listed on the securities exchange.

The board of a fund is the official body or group that has responsibility in terms of the rules and the legislation for that retirement fund.

Responsibility arising from injury or death to another person.

A guarantee type policy issued to protect an insured against claims for financial or performance default.

Bond funds invest in gilts (bonds), fixed deposits and other interest-bearing securities. They may invest in short, intermediate and long-dated securities. The composition of the underlying investments is actively managed and will change over time to reflect the manager`s assessment of interest rate trends. These funds offer the potential for capital growth, together with a regular and high level of income. The benchmark is the JSE All-Bond Index.

A bond that indemnifies an employer from a loss or losses sustained through dishonest acts of bonded employees. Also known as fidelity guarantee.

A bond that indemnifies an insured for failure of a contractor to perform predetermined duties. Also known as performance guarantee.

A bonus is the amount of a life insurance company’s profits allocated to a ‘with profits’ life insurance policy after an actuarial valuation of the whole portfolio of policies in force. The bonus is added to the value of the policy, becoming payable at maturity of the policy or death of the life insured. It may be surrendered under certain conditions. See terminal bonus. A bonus is also the amount paid on short-term policies as a reward for good risk management by the insured. See policy bonuses.

The amount of the bonus payments allocated to with-profits policyholders by way of distribution or established surplus in a particular year.

The term ‘bordereau’ (plural – bordereaux) is used generally to designate detailed listings of risks insured or premiums and losses. Bordereaux are prepared by insurance brokers or insurers for submission to interested parties including other brokers, insurers and reinsures. When used in reinsurance, it is a schedule listing items reinsured, prepared by the ceding company and submitted to the reinsurer. A premium bordereau is a monthly account summarizing the premiums due to the reinsurer for all risks reinsured. A claims bordereau is a summary claim advice which the ceding company submits to the reinsurer in reporting claims. A premium bordereau sets out such information as policy number, class of risk, gross premium, net premium, and reinsurer’s participation.

A process in investing that looks to good stock selection to add value to performance rather than a reliance on broader economic or market trends.

An agent who acts on behalf of the insured in effecting and servicing an insurance policy.

The commission deducted by an insurance broker from premiums paid to him by his clients. The premiums less commission are then forwarded to the insurance company

A fire insurance term referring to insurance rates on the building rather than on its contents

An investor who thinks the market will rise.

Rising market. This is caused by an increase in demand for investment opportunities and inherent growth in the value of companies because of favourable market conditions. In the financial markets, a "bullish" investor believes that prices are about to rise. A bull trend is therefore a trend that is moving upwards.

Words used to describe investor attitudes. Bullish refers to an optimistic outlook.

See funeral insurance.

A term used (more commonly in reinsurance) to denote the pure loss cost of a particular class of business or reinsurance treaty. Burning cost may be expressed either 1. In currency, or 2.As a ratio to some particular measure of the class of business or the reinsurance treaty; for example, in thecase of a direct account it may be the ratio of claims incurred to total sums insured; in the case of a reinsurance treaty, the ratio of claims incurred by the treaty insurer to the ceding company’s gross premium income for the class of business concerned.

Third degree burns covering a percentage of the body surface area.

Insurance that will protect the owner of a business from losses sustained during a period of suspended business caused by fire or other hazard. See loss of profits insurance.

The price at which the investor can buy units inclusive of the initial charge and compulsory charges (marketable securities tax and brokerage) from the management company. Also referred to as the selling or purchase price. The different terminology used in the market is very confusing and should ideally be used in its "broader context" (i.e., buyers\' versus sellers\' price) selling versus repurchase price or purchase versus repurchase price to facilitate a better understanding of its precise meaning. The buyers\'/sellers\'\' spread is the difference between the buyers\' and sellers\' prices. It typically ranges between 6% and 6.5%.

A buy-and-sell agreement is an agreement between the members of a business entity, obligating themselves to sell on their deaths (or disability) their interest to the survivors and likewise obligating the surviviors to purchased the deceased member`s interest.