AXA Mansard Insurance Plc has maintained an efficient underwriting capacity as the Nigerian insurer’s claims expenses continues to mount.
The Nigerian insurer has remained profitable even at the zenith of the 2016 economic recession.
For the first nine month through September 2017, AXA Mansard recorded underwriting profit of N2.14 billion, which is 5.72 percent lower than the N2.27 billion recorded the previous year.
The slight drop in underwriting profit was due to year on year (y/y) rise in claims and underwriting expenses incurred in the period under review.
Analysts attribute mounting claims to recent flooding in some part of the country, coupled with increased awareness by insurance consumers in Nigeria.
AXA Mansard’s total net claims expenses increased by 27.54 percent to N6.76 billion in September 2017 as against N5.30billion as at September 2016.
Chairman of Nigerian Insurers Association, Eddie Efekoha said that with the level of claims paid out to insured victims of the flood, especially in the Lekki area, premium rate for that area will definitely edge higher during renewals. “Having paid so much as claims for Lekki flood, it will not make business sense to charge the same rate during renewals,” he said.
Efekoha said flood insurance being an extension of fire cover, most insurance companies before now offer the cover for free, especially in areas not prone to flood.
AXA Mansard’s claims ratio moved to 65.78 percent in the period under review from 62.58 percent the previous year. This means the insurer has spent N65 on claims expenses in generating every unit of premium income.
The Nigerian insurer paid more money to policy holders from revenue generated in the second quarter of the year. Quarter on Quarter claims ratio was 81 percent in that period.
While the Nigerian insurer’s total underwriting expenses are rising, its performance at the top lines (revenue) are impressive as gross premium written (GPW) spiked by 33.17 percent to N22.56 billion as at September 2017.
Gross premium income and Net premium income was up 28.75 percent and 21.65 percent to N19.61 billion and N10.28 billion from N15.23 billion and N8.45 billion respectively in the period under review.
AXA Mansard’s investment income spiked by 40.37 percent to N3.72billion, thanks to an 11.12 percent and 368.18 percent contribution from interest income from investment securities and interest income on cash and cash equivalent.
Income from investment securities make up 37 percent of investment income as insurers in Africa’s largest economy and largest oil producer took advantage of increase in yield on Treasury Bills (T-bills).
Yield on T-bills has been around 21 percent to 23 percent in the past 5 months but has fallen to 18 percent recently as investors are increasingly dumping other assets for T-bills because of attractive yield.
Further analysis of AXA Mansard’s financial statement shows net income fell by 13.48 percent toN2.63 billion in September 2017 as against N3.04 billion as at September 2016.
Total operating expenses were up by 7.31 percent to N4.40 billion in September 2017 as against N4.10billion as at September 2016.
The Nigerian insurer’s return on equity (ROE), rose to 13.67 percent in the period under review, from 17.47 percent the previous year, which means the insurer will have to grow profit in order for its owners to reap the fruit of investing their resources in the company.
BALA AUGIE
