A surge in investment income combined with cost costs help underpinned Law Union and Rock Insurance Plc’s full year profit as the underwriting firm expects gross premium income to increase by 35 percent in 2018.
Law Union and Rock has enough assets to cover future liabilities and there are no threats to its going concerns as its solvency ratio stood at 243.17 percent as at December 2017.
For the year ended December 2017, Law Union and Rock’s net income spiked by 50.86 percent to N848.88 million as against N561.85 million the previous year.
The increase in bottom line was due a surge in investment and other income by 31.64 percent to N904.77 million as operating expenses remained flat at N1.23 billion amid a tough operating environment.
Profit from operating activities was up 51.97 percent to N1 billion in December 2017 as against N658.64 million the previous year.
The Nigerian insurer has utilized the resources of its owners in generating higher profit while adding value to shareholders’ value.
Return on equity (ROE) increased to 13.13 percent in December 2017 from 11.15 percent as at December 2016. Return on asset (ROA) followed the same growth trajectory as it moved to 8.23 percent in 2017 from 6.58 percent the previous year.
Experts who spoke to BusinessDay attribute the stellar performance of the insurer to market penetrating products and an excellent marketing strategy.
Gross premium written (GPW) spiked by 8.10 percent to N4.25 billion in the period under review as against N3.93 billion the previous year.Gross premium income (GPI) increased by 11.64 percent to N4.41 billion in the period under review as against N3.93 billion the previous year.
Jide Orimolade, Managing Director of the company, said that the insurer has positioned itself to grow GPW by 35 percent in 2018 and that an economic recovery will help drive revenue growth as many companies will take up a cover more than they did last year.
Nigeria, Africa’s largest economy and most populous nation existed its first recession in 25 years as GDP expanded by 0.55 and 1.40 in the first and second quarters of 2017, according to the National Bureau of Statistics (NBS).
Nigerian inflation has dropped to 15.37 percent in December 2017, which is an 11 consecutive decline.
The country’s external reserve has hit $40.40 billion, thanks to a rebound in production on the back of relative calm in the Niger Delta region and an uptick in oil price.
Law Union and Rock is efficient as its combined ratio (CR) of 69.05 percent as at December 2017 is lower than the 100 threshold.
The Nigerian insurer has paid N784.90 million in claims as at December 2017, which represents a 6.55 pecent reduction in 2016 figure of N839.74 billion.
Claims ratios fell to 29.29 percent in December 2017 from 31.64 percent as at December 2016.
Underwriting expenses were up 33.30 percent to N1.05 billion in the period under review as against N787.17 billion the previous year. Underwriting expenses ratio increased to 39.62 percent in the period under review as against 29.58 percent the previous year.