Zenith General Insurance improves on key indices
by BALA AUGIE
June 12, 2018 | 1:23 am| | | Start Conversation
Jim Ovia, chairman, Zenith General Insurance
Zenith General Insurance Company Limited (ZGIC) is wholly owned subsidiaries of Zenith Bank Plc. General Insurance Company Ltd. is a buy-over of Piccadilly Insurance Company Limited, which was incorporated in 1970. The company is one of Nigeria’s leading financial Institutions.
Solvency margin exceeds regulatory threshold
Zenith General Insurance Company Limited, one of the youngest in the industry, has a solvency margin of 734 percent in 2017 as at December 2017.
A solvency ratio of 734 percent means Zenith General Insurance is able to cover its minimum regulatory solvency requirement seven times over. It also means the company’s assets can cover all its debt, and it has enough money to fund an aggressive expansion plan.
Diversified Product Base underpins Premium income
For the year ended December 2017, Zenith General Insurance grew gross premium written by 12.96 percent to N12.55 billion from N11.11 billion the previous year.
Gross premium income increased 14.39 percent to N12.80 billion in December 2017 as against N11.18 billion as at December 2016.
The company’s strict adherences to corporate guidelines combined with the introduction of market penetrating products are major drivers of revenue amid a tough and unpredictable macroeconomic environment.
The insurance company continues to leverage on its trusted brand, responsive service to clients, and development of mutually partnership to deliver quality service to clients.
The company’s reinsurance expenses were up 25.93 percent to N4.71 billion in December 2017 from N3.74 billion the previous year.
However this did little to affect the company’s net premium income as it increased by 8.73 percent to N8.09 billion in the period under review as against N7.44 billion the previous year.
With respect to insurance benefits and claims paid out, the insurer’s claims expenses increased by 43.06 percent to N4.85 billion in December 2017 from N3.34 billion the previous year.
Underwriting expenses were up 17.29 percent to N1.56 billion in the period under review from N1.33 billion as at December 2016.
Claims expenses of insurers in Africa’s largest economy have been mounting on the back of foreign exchange movement and awareness on the part of policy holders.
Zenith General Insurance is one of the most profitable insurers in Nigeria
Zenith Insurance is one of the most profitable insurers in the in Nigeria as its bottom line is larger than most of its peer rivals.
It recorded profit before tax of N4.75 billion in the period under review. Zenith Insurance’s profitability ratio of 37.84 percent in the period under review is also one of the largest in the industry.
Net underwriting income increased by 11.73 percent to N9.33 billion in the period under review as against N8.35 billion the previous year.
Zenith Insurance’s investment income increased by 57.14 percent to N3.63 billion in December 2017 from N2.31 billion as at December 2016.
An increase investment income means insurer used the resources of shareholders in generating higher investment returns. It also means the firm has an excellent asset allocation strategy.
Management expenses were up 14.08 percent to N3.32 billion in the period under review from N2.91 billion the previous year.
Zenith Insurance Maintains Efficient Underwriting Performance validates
Zenith Insurance’s combined ratio (CR) increased to 79.29 percent at as at December 2017 from 41.75 percent recorded the previous year.
A ratio below 100 percent indicates that the company is making underwriting profit, while a ratio above 100 percent means that it is paying out more money in claims that it is receiving from premiums. Even if the combined ratio is above 100 percent, a company can potentially still be profitable because the ratio does not include investment income.
The combined ratio is calculated by taking the sum of incurred losses and underwriting expenses and then dividing them by earned premium.
Zenith Insurance’s favorable combined ratio otherwise known as policy holder dividend resulted in a real underwriting performance of N2.32 billion as at December 2017.
Real underwriting performance is arrived at by deducting combined ratio from 1 then multiplying the answer by 100. It shows the extent to which a firm has managed claims and underwriting expenses in producing underwriting profit.
Zenith Insurance’s claims ratio increased to 60 percent in December 2017 as against 44.75 percent the previous year. In other words, the company spent on claims N60 in generating every unit of premium income.
Underwriting expenses ratio fell to 19.28 percent in December 2017 from 17.84 percent the previous year. This firm has spent N19 on underwriting expenses in generating every unit of premium income.
Modest Increase in Balance Sheet
The company’s balance shows slight positive changes in total assets, net assets and total liabilities, as the financial position as at year ended December 2017. Total assets increased by 1.09 percent to N37.02 billion in December 2017 as against N37.0 billion the previous year.
In terms of obligations, the company’s total liabilities shows a growth of 1.72 percent to N13.54 billion in December 2017 from N13.31 billion the previous year.
The key drivers of the slight improvement in total liabilities were an increase of 12.35 percent insurance contract liabilities to N9.46 billion from N8.34 billion, 71.90 percent rise in current income tax liabilities.
Zenith General Insurance’s shareholders’ fund otherwise known as net assets increased by 1 percent to N23.47 billion in December 2017 from N23.31 billion the previous year.
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