Lasaco Assurance Plc, a company that provides life and general insurance services, is in a growth spurt as it recorded a double digit growth at the top and bottom lines despite rising claims expenses.
The solid results in the second quarter amid a slow growing economy means the investment strategy of management has yielded fruit.
If the stellar performance continues to the end of the year, shareholders will have higher returns on their investment in form of a spike in dividend payment.
The Nigerian insurer has continued to find opportunities to attract talented individuals with the knowledge and expertise to build new specialty businesses and strengthen proved reserve.
For the first six months through June 2016, Lasaco beat analysts’ expectation of weak results on the back of economic sluggishness as net income increased by 24.40 percent to N492.87 million from N396.18 million the previous year.
Further, gross premium written (GPW) increased by 38.40 percent to N4 billion in the period under review as against N2.89 billion the previous year.
Gross insurance premium earned followed the same growth trajectory as it jumped by 7.90 percent to N2.73 billion in June 2016 compared with N2.53 billion as at June 2015. Net insurance premium earned were also up by 13.82 percent to N1.40 billion as against N1.23 billion as at June 2015.
The strong leap in premium was as a result of a well-diversified product base and a solid market-penetrating product while contemporaneously pursing the strategic goal of the maximising shareholder’s wealth.
A cursory examination of the financial statement of the company shows the growth at the bottom line was bolstered by a 528.01 percent rise in other income to N1.51 billion, which signifies improved alternative investment strategy.
However, the Nigerian insurer’s rising claims expenses has undermined underwriting performance and spiralled combined ratios (CR).
Claims expenses surged by 516.96 percent to N1.31 billion, which culminated in a CR of 127.85 percent in June 2016, from a low of 42.01 percent last year. The high CR resulted in an underwriting loss of N139.47 million, from an underwriting profit of N971.40 million.
In the business of insurance, a CR less than 100 percent is considered favourable.
While the economy is grappling with lower oil price, rising inflation due to increased price of gasoline and rising price of foodstuff, experts are of the view that the Nigerian insurance market still remains attractive to leading global insurance companies who are increasingly acquiring local companies.
It will be recalled that South Africa’s giant, Old Mutual, took over Oceanic Insurance, Sanlam Insurance bought FBN Life Assurance, NSIA participations took over ADIC Insurance and Greenoaks Global Holdings acquired Union Assurance.
The latest spate of takeover was when France’s Axa announced that it had acquired a 77 percent interest in Mansard Insurance, formerly GTAssurance, for €198million.
BALA AUGIE
