Niger Insurance turns a profit from recession lows
Niger Insurance Plc has turned a profit following the worst recession in 25 years that saw the Nigerian insurer’s premium income fall.
For the first nine months through September 2017, Niger insurer’s reported a profit after tax of N269.52 million from a loss after tax of N529.11 million the previous year.
Gross premium written (GPW) was up 55.015 percent to N7.13 billion in September 2017 as against N4.68 billion the previous year.
The growth in GPW was underpinned by a 300.90 percent and 84.29 percent surge in premium income from Individual and Group Life business to N4.41 billion and N5.95 billion respectively.
Experts attribute the firm’s stellar numbers to the uptick in economic activities as the country’s economy emerged from a recession in the second quarter, expanding by 0.55 percent after a contraction in GDP in 2016, according to National Bureau of Statistics (NBS).
This means a lot of companies that were unable to take a cover because their cash-flow were hard hit as result of the economic downturn of last year are now buying insurance.
Despite the a currency volatility, epileptic power supply, cut throat inflation, internal conflicts between herdsmen, the insurance industry recorded 22.2 per cent growth in gross premium income for the 2016 financial year at N380 billion as against N311 billion recorded in 2015, according to a recent report by the National Insurance Commission (NAICOM).
Niger Insurance is efficient as its combined ratio of 66.13 percent in September 2017, which is lower than the 66.50 percent recorded last year, is less than the 100 percent threshold.
The CR is the combination of underwriting expenses and loss ratio.
Niger Insurance has an excellent underwriting capacity as underwriting profit increased by 22.69 percent to N1.73 billion in September 2017 compared to N1.41 billion as at September 2016.
The Nigerian insurer’s claims expenses increased by 22.06 percent to N2.60 billion in the period under review as against N2.13 billion as at September 2016.
Claims ratios otherwise known as loss ratios were flat at 50 percent in the period under review as demand for claims by policy holders spiked.
While Nigeria is largest economy in Africa, the country’s premium penetration is abysmally poor.
Out of Nigeria’s estimated population of two hundred million populations, and of ninety million adults, only two million people have one form of insurance cover or the other.
This explains why the sector’s contribution to GDP is less than 1 percent, lagging sub-Saharan countries like Kenya and South Africa
Experts have attributed the poor contribution of the sector to the economy to apathy toward insurance, lack of proper regulation and weak consumer spending. Further analysis of Niger Insurance’s financial statement shows shareholders fund moved by 9.97 percent to N8.54 billion as against N7.78 billion as at September 2016.
This means the insurer has enough funds to take on more risk and finance future expansion plans.
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