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Linkage Assurance Nigeria Plc’s investment in shares in other firms, Treasury Bills (T-bills) and bonds have yielded fruit as the insurer’s third-quarter profit surged.
For the first nine months through September 2017, Linkage Assurance’s profit after tax surged by 297.01 per cent to N2.44 billion from N616.15 million the previous year.
Profit before tax followed the same growth trajectory has it spiked by 272.92 per cent to N2.87 billion from N770.12 million as at September 2016.
The growth in net income was underpinned by a 31,913 per cent surge in dividend income to N2.51 billion in the period under review.
READ ALSO: Linkage Assurance grows profit by 894%, rewards shareholders with a bonus issue
“Insurers hold those premiums you pay them in assets like bonds, shares, and Treasury Bills (T-bills) so that if there is a claim they can sell it,” said a top analyst who does not want his name mentioned.
“They buy shares of other firms and earn income from it,” said the analysts,” said the analyst.
Linkage Assurance was able to utilize the resources of its owners in generating higher profits while margins improved.
Return on equity (ROE) increased to 11.93 per cent in September 2017 compared to 3.73 per cent the previous year. Return on assets moved to 10 per cent in the period under review as against 3.30 per cent as of September 2016.
Linkage Assurance has been introducing innovative and market-driven products to increase its share of the Nigerian market.
READ ALSO: Linkage Assurance grows total assets to N32.9 billion in Q3
Some of the new products introduced by the insurer include Linkage Purple Motor Plus; Linkage Third Party Plus; Linkage Shop Insurance; Linkage Event Insurance; Linkage Estate Insurance and Linkage SME Comprehensive.
The economic downturn showed, were faced in the numbers of the Nigerian insurer as premium income slowed in the period under review.
READ ALSO: Linkage Assurance grows profit by 894%, rewards shareholders with a bonus issue
Net premium income dropped by 13.73 per cent to N2.01 billion in September 2017 from N2.33 billion as at September 2016. Gross premium income was also down 2.77 per cent to N3.15 billion in the period under review as against N3.24 billion.
As a result of receding premium income, and rising underwriting expenses, Linkage Assurance’s underwriting profit reduced by 87.62 per cent to N65.04 million in September 2017 from N525.75 million the previous year.
The Nigerian insurer’s claims expenses were down by 4.84 per cent to N697.49 million in September 2017 from N733.01 billion. Claims ratio increased to 34.65 per cent in September 2017 from 31.37 per cent as of September 2016.
BALA AUGIE
