Wide range of regulatory reforms initiated by the National Insurance Commission (NAICOM) targeted at strengthening insurance institutions may have impacted positively on the performances of underwriting firms in the industry.
Specifically, the effective enforcement of the regulation on premium collection and remittances by the commission have resulted in dramatic improvement in the cash flow of insurance companies operating in the market to pay claims promptly, uniformity in International Financial Reporting Standards (IFRS) account reporting across industry players; the drive by the commission towards increasing penetration through the market development and restructuring initiative (MDRI) project for the purpose of building public confidence in the industry.
The report of the financial performances of some underwriting firms last year is an indication of the success of some of these initiatives.
For instance, Leadway Assurance Company Limited announced a 20 per cent increase in gross premium written income from N39 billion in 2014 to N46.6 billion in 2015, this was largely attributable to the significant increase in premiums written under annuity business.
Interim Chairman and Director of the company, Jeremy Rowse, addressing shareholders at the 44th yearly general meeting held in Lagos, said net underwriting income also increased by 31 per cent from N31.1 billion in 2014 to N40.8 billion in 2015, due partly to the prior year’s premium written earned in the current year as well as a result of significant growth in the annuity book.
According to him, there was an increase in claims expenses in 2015 by 13 per cent from N12.7 billion in 2014 to N14.3 billion in 2015. This was attributed to annuity payments and higher claims paid under the general business segment. Overall, underwriting expenses increased from N3.4 billion in 2014 to N5 billion in 2015, an increase of 48 per cent. The business recorded a -531 per cent decrease in underwriting profit from N3 billion in 2014 to a loss of N12.9 billion in 2015 owing to growth in annuity reserves.
He said “despite the political risk, currency volatility and uncertainty in the global crude oil price, investment income increased by 33 per cent from N7.4 billion in 2014 to N9.9 billion in 2015, translating to a significant increase in profit after tax for the year by 125 per cent from N2.8 billion in 2014 to N6.3 billion in 2015.”
The company’s assets recorded a 10 per cent growth from N100.5 billion in 2014 to N137.3 billion in 2015 following significant growth in retained earnings and increase in contingency reserves.
Also, Custodian and Allied Plc recorded a gross premium income of N29.8 billion, an increase of 19 per cent over the previous year, while profit before tax increased by 11.8 per cent from N5.1 billion to N5.7 billion and profit after tax rose by four per cent to N4.2 billion.
The chairman of the company, Chief M. Ade Ojo, addressing shareholders at the 21st yearly general meting of the company held in Lagos said “despite the tumultuous business environment which the company operated in 2015, it is indeed gratifying to note that the management of your company did not only survive but thrived respectably.
Gross revenue increased by 19 per cent to N29.8 billion, while the profit before tax increased by 11.8 per cent from N5.1 billion to N5.7 and profit after tax rose by four per cent to N4.2 billion.
Chief Ojo who has announced his retirement said “the strength of the group is demonstrated in the structure of its assets which stood at N57 billion with cash, cash equivalents and financial assets component making up more than N38 billion, or approximately 66 per cent of the total assets. This level of liquidity assures of our readiness to take advantage of whatever opportunities that may arise while at the same time, provides the safety that our clients and shareholders require in this highly volatile environment.”
AIICO Insurance Plc recorded a profit before tax of N1.4 billion in the financial year 2015 as against the N3.1 billion recorded in 2014, down by N1.6 billion or by 53.4 per cent.
This was made known in the company’s 2015 full year audited financials posted on its website. The company also witnessed a decline in its gross premium income as it records N9.94 billion in the year under review as against the N20.55 billion it recorded in 2014.
Source: Guardian News