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NEM Insurance Plc’s premium income has spiked amid a tough operating environment, thanks to the insurer’s focus and market penetration strategies.
For the first nine months through September 2017, NEM’s underwriting profit increased by 18.53 percent to N3.39 billion from N2.86 billion as at September 2016.
The growth in underwriting profit was underpinned by a reduction in claims expenses and strong growth in premium income.
NEM is efficient as combined ratios (CR) of 51.33 percent in the period under review, which is lower than 60.81 percent recorded last year, is less than the 100 percent threshold.
The CR is the combination of the claims and underwriting expenses.
Despite the vagaries of the business environment, the Nigerian insurer recorded a 22.80 percent increase in gross premium written (GPW) to N11.06 billion from N9.0 billion the previous year.
A breakdown of top line (revenue) shows premium from Fire Insurance increased by 29.84 percent to N2.74 billion; Oil and Gas, was up 33.15 percent to N1.12 billion; General Accident Insurance, jumped 16.84 percent to N2.15 billion, and Marine increased by 17.05 percent to N1.05 billion.
NEM’s claims expenses fell by 48.41 percent to N784.93 billion in the period under review as against N1.52 billion as at September 2016.Claims ratio fell to 12.30 percent in September 2017 compared to 24.79 percent as at September 2016. This means the company is spending less on claims to generate each unit of product.
Insurers in Africa’s most populous nation and largest oil producer are losing huge premium revenue to instalment payments by policy holders, according to the Fire Committee of Nigerian Insurers Association (NIA).
The committee stated in a report presented to the association that installment payment by policyholders usually result to loss of premium revenues in the event of losses which are sometimes total in occurrence.
To mitigate the challenge, the committee suggested that short premium cover computation should be used for premium installment requests on motor transactions, whilst on non-motor transactions, the policy should be warranted that premium outstanding becomes payable in the event of a loss.
NEM Insurance’s net income surged 35.20 percent to N1.69 billion in September 2017 compared to N1.25 billion as at September 2016.
The Nigerian insurer is efficient as net margins increased to 26.30 percent in the period under review from 14.53 percent as at September 2016.
NEM has utilized the resources of its owners in generating higher profit as return on equity (ROE) increased to 19.42 percent in September 2017 as against 16.02 percent as September 2016.
BALA AUGIE
