13 Insurers’ premium income surges on price adjustment, local content
by BALA AUGIE
October 6, 2017 | 1:31 am| | | Start Conversation
Nigerian listed insurance companies have seen premium income surge in the second quarter of 2017, thanks to an adjustment in sum insured, and the Local Content Act.
Analysts say insurers will likely maintain the growth momentum as the exchange rate stability is expected to impact positively on the insurers’ revenues from improved premium from oil and gas.
“Prices of things have increased and clients are advised to their sum insured,” Moronfola Monsuru, an actuarial analyst, said. “The improvement could be as a result of awareness for insurance. A lot of people are tiring to manage their risk.”
Most insurers listed on the floor of The Nigerian Stock Exchange have recorded double digit growth in revenue, the highest since the pre-recession period.
BusinessDay’s analysis of the 13 members of the NSE Insurance Index that have released half year results for 2017 show that, on a cumulative basis, gross premium written (GPW), spiked by 21 percent to N92.83 billion, from N76.49 billion in 2016.
Similarly, cumulative gross premium income (GPI) and net premium income (NPI) rose by 18.0 percent and 9.63 percent to N74.84 billion and N51.84 billion respectively.
The NSE Insurance Index includes Alliance Insurance, Aiico Insurance, Axa Mansard Insurance, Cornerstone Insurance, Lasaco Assurance, Law Union and Rock Insurance, and Linkage Assurance.
Other companies in the Index are NEM Insurance, Niger Insurance, Prestige Assurance, Regency Continental, Reinsurance, Staco Insurance, Standard Alliance Insurance, and Wapic Insurance,
Orimolade Jide, the managing director and chief executive officer of Law Union and Rock Insurance, attributes the growth in premium to the Local content act as a lot of businesses that used to be taken overseas are now being done in the country.
“There has been improvement in revenue especially in the area of Life Assurance because of the compulsory Group Life,” said Jide.
Analysis of the figures shows Niger Insurance’s GPW surged by 87 percent to N6.18 billion as at June 2017 while prestige recorded a 50 percent surge in GPW to N2.23 billion. N.E.M’s GPW spiked by 38 percent to N8.11 billion.
AXA Mansard’s GPW spiked by 36 percent to N17.94 billion in the period under review while Wapic’s GPW increased by 36 percent to N5.89 billion. Continental Re’s GPW’s surged by 27 percent to N15.19 billion as at June 2017.
Stake holders say that improved premium income validates Nigeria’s exit from a crippling recession, its first in 25 years, as purchase of insurance cover has improved.
“I can see a lot of commercial activities and also a lot of improvement in terms of insurance purchase,” Funmi Babington-Ashaye, President, Chartered Insurance Institute of Nigeria (CIIN) said. “If we compare the improvement to what we have last year, we can agree with the Federal Government that technically we are out of recession. But it will take some time before people start feeling the positive impact.”
Mohammed Kari, Commissioner for Insurance, says there are indications that the insurance industry’s gross written premium for 2017 could climb over N400 billion as against the N320 billion recorded in 2016.
According to the Kari, The industry’s total assets stand at N1.05 trillion, with gross written premium as at December 2016 standing at over N320 billion,
The 13 firms, who are the most liquid insurers, have enough capital to take on more risk as cumulative shareholders fund increased by 7 percent to reach N140.06 billion at the end of June 2017.
These firms have a shareholders fund higher than the N3 billion capital requirement set by the National Insurance Commission (NAICOM).
Nigeria’s economy returned to positive growth in the second quarter of 2017, as real gross domestic product (GDP) increased by 0.55 percent compared to Q2 2016. The economy had witnessed five consecutive quarters of negative growth.
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