Cornerstone Insurance quarterly result firms, as premium income surge

Cornerstone Insurance Plc continued its good performance in the second quarter of 2015 as the company’s premium income accelerated.

The results also means the profit components contributed to growth, including the company’s investment and underwriting results as well as possible net gain from the sale of investment.

Cornerstone’s gross premium income increased by 23.25 percent to N4 billion in June 2015, from N3.23 billion in the same period of the corresponding year (H1) 2014.

Premium income was up 12.34 percent to N3 billion in the period under review as against N2.67 billion in 2014.

Net premium income a gauge of efficient underwriting capacity also followed the same growth trajectory as it jumped 8.69 percent to N2 billion in 2015 as against N1.84 billion the previous year.

Analysts say the company’s continued shift towards market penetrating products designed to address the high interest rate environment for its customers and shareholders also contributed to the solid underwriting profit.

In order to strengthen its position in the Nigeria, Cornerstone got approval from its shareholders to acquire FIN Insurance Company Limited, one of Nigeria’s insurance firms and a subsidiary of FCMB.

This acquisition is expedient as the Nigeria insurance industry still remains fragmented and its contribution of the country’s GDP low when compared with Africa’s second largest economy South Africa.

Analysts say insurance regulators should emulate the banking sector reforms such as its consolidation exercise that cut the number of banks to 25, making lenders balance sheet attractive to foreign investors.

Despite the impressive performance at the top line, Cornerstone’s rising operating expenses took a toll on bottom line as after tax (PAT) reduced by 60.1 percent to N233.68 million in the period under review compared with N586.89 million in 2014.

The company’s operating expenses were up by 21.50 percent to N1.13 billion in June 2015 as against N930.64 million in June 2014.

Underwriting expenses were up 41.20 percent to N725.70 million.

Cornerstone is increasing claims to policyholders as claims ratio spiked to 42.0 percent in June 2015 compared with 27 percent in 2014. Expense ratio moved to 92.75 percent in 2015 as against 78.10 percent in 2014 which means for every N1 generated in revenue, the company spent N0.92 on operating expenses.

The company said last year that it will continue to maintain a position that will take full advantage of the huge potential in the market with a view to increase market shares and deliver good returns on investment to the stakeholders.

Total assets increased by 8.05 percent to N15.47 billion in June 2015, from N14.53 billion. Shareholder’s fund stood at N8 billion as at June 30 2015.

Cornerstone share price closed at N0.50 on the floor of the exchange while market capitalization was N4.41 billion.

Source: Businessday