Wapic Insurance Plc, the top underwriter in the country, has delivered stronger financial performance compares to peers as it recorded double digit growth in premium income and profit.
Wapic Insurance has recorded impressive growth across key performance indicators for the year ended December 2017.
An efficient underwriting capacity, the introduction of market penetration product, channel utilization, and capacity building help propel the company’s earnings.
For the year ended December 2017, Wapic insurance’s net income surged by 161.08 percent to N1.53 billion, the strongest year on year growth among insurers that have released full year results on the web site of the Nigerian Stock Exchange (NSE).
Underwriting profit surged by 301.91 percent to N1.53 billion in the period under review as against N380.67 million the previous year, which means there is enough income after settling claims to pay for operating expenses and other exceptional items.
Wapic insurance’s solvency ratio stood at 285 percent or 2.85 times in the period under review, from 266 percent or 2.66 times the previous year.
This means that the Nigerian insurer’s assets is 2.85 times the liabilities that it holders, which puts it in a position to pay claims that might be made by customers.
Different countries use different methodologies to calculate the solvency ratio, and have different requirements. For example, in India insurers are required to maintain a minimum ratio of 1.5.
Wapic Insurance is good financial health and if it is paying less claims than it receives in revenue as combined ratio (CR) fell to 84.09 percent in the period under review from 106.05 percent the previous year.
The combined ratio (CR) after policyholder dividends ratio,” is a measure of profitability used by an insurance company to gauge how well it is performing in its daily operations.
The combined ratio is calculated by taking the sum of incurred losses and expenses and then dividing them.
A ratio below 100 percent indicates that the company is making underwriting profit, while a ratio above 100 percent means that it is paying out more money in claims that it is receiving from premiums.
Wapic Insurance is among the NEXT Big 10 insurers (Zenith, African Alliance, FBN Insurance, Royal Exchange, Niger, Cornerstone, Linkage, and NEM) by total assets and premium written, which makes it a target for big global players in the insurance market.
“We highlight that the NEXT 10 account for 25 percent of the market and a consolidation of the 1st 6 (Zenith, African Alliance, FBN Insurance, Royal Exchange, WAPIC, and Niger) of them could lead to the emergence of the largest insurance company in Nigeria by total assets and gross premium income, overtaking Leadway Assurance,” said analysts at Chapel Hill Denham in a report.
Consolidation is increasingly becoming inevitable because most insurers have a very weak capital base that has prevented them from taking on more risk and become competitive on a global arena.
Some foreign investors have shown interest in some Nigerian firms as they continue to hunt for attractive assets and stamp their footprint across Africa.
Some of the investors, according to him, are AXA, Prudential, Liberty, Swiss Re, Sunu Group, Saham and Allianz, among others.
Further analysis of Wapic Insurance’s financial statement shows gross premium written, gross premium income and net premium income spiked by 23.12 percent, 26.24 percent and 32.02 percent to N9.80 billion, N9.58 billion and N5.65 billion in the period under review.
BALA AUGIE
