Staco Insurance H1 premium income surge staves off profitability whirl storm
by BALA AUGIE
August 16, 2017 | 1:18 am| | | Start Conversation
The storm is over for Staco Insurance Plc as half year premium income jumped 14.85 percent after a torrid operations environment that saw operators in the industry lose money last year.
The Nigerian insurer’s stellar performance amid violate and tough operating environment means it is steadfast in its objective of adding value to shareholders’ wealth.
For the first six months through June 2017, Staco Insurance gross premium written surged 14.85 percent to N3.48 billion as against N3.03 billion generated the previous year.
Gross premium income spiked by 22.29 percent to N3.62 billion as the company continues to introduce innovative and market-driven product with a view to increasing its share of the market.
Further analysis of insurer’s financial statement shows that motor, the biggest class of business that accounts for 29.94 percent of total gross premiums written, dropped by 13.32 percent to N883.32 million in the first half as premium shifted from comprehensive to third party policy in some cases.
Fire insurance premiums increased by 10.45 percent to N799.26 million in the period under review while oil and gas premiums spiked by 82.11 percent to N600.334 million. General insurance premium fell slightly by 2.10 percent to N450.18 million as premium from marine insurance increased by 43.73 percent to N396.98 million.
Despite the growth recorded by Staco, insurers are still operating in a tough and challenging environment as uncertainties in the economy soured consumers appetite for insurance products.
“Some premiums were now paid quarterly with reduced amount of sum insured which led to the reduction in the cash flow of the organization,” said Samuel Turoti, chairman of Staco, at the company’s Annual General Meeting. “Also, the cost of doing business increased tremendously there by reducing the purchasing power of both the individual and corporate bodies.”
A sharp drop in oil price and severe dollar shortage tipped Nigeria to its first recession in 25 years as the economy contracted by 0.52 percent the last quarter of 2016, according to the a recent report by the National Bureau of Statistics (NBS).
While inflation of 16.10 percent for the month of June is the lowest in 13 months, it is above the upper end of the Central Bank’s target band of 6 percent to 9 percent.
Staco Insurance claims expenses increased by 117.18 percent to N592.18 million in June 2017 from N292.18 million the previous year.
The Nigerian insurer recorded underwriting profit of N1.46 billion in the period under review. Net income stood at N202.04 million for the half year-ended June 2017.
Staco Insurance’s solvency margin of N3.46 billion exceeds the N3 billion threshold set by the National Insurance Commission NAICOM. This means the company is efficient in the allocation of capital as it maintainins an excellent risk management strategy.
The company says it will target more insurance market using the microfinance space as it intensifies its aggressive expansion plans with a view to adding value to shareholders’ wealth.
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