First Bank Insurance Plc’s underwriting profit surges 45.16 percent to end 2016 financial year on a high amid a volatile and tough operating environment as the Nigerian insurer continues to benefit from its diversified product base.
For the year ended December 2016, First Bank Insurance’s underwriting profit moved to N4.01 billion from N2.76 billion as at December 2015.
The Nigerian insurer posted a profit after tax of N3.36 billion in the period under review, a 27.95 percent increase of last year’s figure of N2.07 billion.
However, the Nigerian insurer premium to surplus ratio or net premium to shareholders fund ratio rose to 121.11 percent in December 2016 from 109.26 percent as at December 2015.
This means First Bank Insurance’s premium is 1.21 times shareholders’ fund.
This ratio is designed to measure the ability of the insurer to absorb above-average losses and the insurer’s financial strength. The lower the ratio, the greater the company’s financial strength.
Analysts are of the view that the country’s low insurance penetration reflects headroom for growth as the sectors contribution to the Nigerian economy remains abysmally poor.
Apathy towards insurance, lack of proper regulations and a volatile and unpredictable macroeconomic environment have continued to undermine the growth of insurance companies in Africa’s most populous nation and largest oil producer.
Little wonder the industry contributed less than one percent to the economy.
Nigeria insurance penetration stood at 0.18 percent as at 2016, this compares with South Africa (2.71 percent), Namibia (2.70 percent), Morocco (2.0 percent), Kenya (1.80 percent) and Tunisia (1.70 percent), penetrations respectively, according to Swiss Re and International Monetary Fund (IMF).
“At 0.18 percent, Nigeria has the lowest short term penetration (short term/ nominal GDP) among the regional and African markets,” said analyst at Chapel Hill Denham Research Limited.
“The country’s penetration is comparable to 0.30 percent for Egypt, but trails the average of 1.50 percent for the African countries we covered in this report and 2.70 percent for South Africa,” said analysts at Chapel Hill Denham.
Further analysis of the financial statement of First Bank Insurance shows claims expenses dipped by 30.15 percent to N2.33 billion in the period under review while claims ratios otherwise known as loss ratio fell to 32.15 percent in December 2016 from 24.0 percent as at December 2015.
The Nigerian insurer’s underwriting expenses were up 44.94 percent to N2.45 billion while underwriting expenses ratio increased to 25.12 percent in the period under review from 16.20 percent as at December 2015.
BALA AUGIE
