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Wapic Insurance Plc recently released its financial statement for the first quarter ended 31st March 2018 showing an impressive growth in gross revenue and efficient underwriting capacity.
The Nigerian insurer has been recording solid growth in earnings in the last 10 years as it continues to reward shareholders with a steady dividend payment.
A stellar performance could see more investors buy into the company’s stock, signaling their confidence in management’s growth plans.
Significant growth in revenue
For the first three months through March 2018, Wapic Insurance grew gross premium written by 18.30 percent to N4.46 billion from N3.77 billion the previous year.
The rise in revenue was largely on the back of significant rise in Motor Insurance segment which surged by 81.75 percent to N761.86 million and revenue for non life of N823.69 million the period under review.
Gross premium income increased by 17.67 percent to N2.53 billion in the period under review as against N2.15 billion the previous year while net premium income grew by 23.62 percent to N1.57 billion in March 2018 from N1.27 billion as at March 2017.
The company’s efficient underwriting performance and its ability to introduce market driven product are mainly responsible for the uptick both at the top (revenue) and bottom line (profit).
The company’s net income from underwriting activities spiked by 26.23 percent to N1.15 billion in the period under review as against N911.01 million while underwriting income increased by 25.35 percent to N1.78 billion from N1.42 billion the previous year.
Fees and commission income rose by 40.10 percent to N214.48 million in the period under review from N153.09 million as at March 2017.
Other operating profit decreased by 56.26 percent to N11.03 million in the period under review from N25.34 million as at March 2017. The decline in other operating income was due to zero balances in net realized gains in financial assets and net realized gains on financial assets FVPTL.
The company’s pretax profit fell by 16.85 percent to N319.37 million in March 2018 from N384.10 million the previous year. The drop in pretax profit was due to a share of profit of associate by 16.37 percent to N308.34 million in March 2018 as against N358.68 million as at March 2017.
Profit after tax dipped by 12.26 percent to N265.35 percent in the period under review from N265.74 million the previous year. The drop in after tax profit was due to a 27.23 percent decline in taxes to N86.12 million in March 2018 from N118.36 million the previous year.
Efficient underwriting performance bolsters underwriting profit
Wapic Insurance is efficient and there is no threat to going concern as combined ratio (CR) of 64.33 percent is lower than the 100 percent regulatory threshold.
The 64.33 percent CR resulted in real underwriting performance of N560.01 million real underwriting profit. Under writing profit was up 81.40 percent to N772.60 million in March 2018 from N425.91 million the previous year.
With respect to insurance claims paid out, the insurer’s insurance claims, net claims, and underwriting expenses form total underwriting expenses which increased by 26.23 percent to N1.15 billion in March 2018 from N911.01 million as at March 2017.
Further scrutiny of the financial statement shows net claims grew by 6.57 percent to N691.47 million in March 2018 from N648.84 million the previous year. Claims recoverable, a component of net claims expenses surged by 235.58 percent to N218.43 million in the period under review from N65.09 million the previous year.
Underwriting expenses were up by 8.13 percent to N324.19 million in the period under review from N352.88 million the period under review.
Claims expenses ratio otherwise known as loss ratio increased to 43.97 percent from 50.86 percent as at March 2017. This means the insurer has spent on claims expenses to generate every N100 in premium income.
Underwriting expenses fell to 20.60 percent in March 2018 from 27.62 percent the previous year. This means the insurer has spend less on marketing, sales expenses relating to underwriting activities in generating each unit of premium income.
Improved underwriting ratios are responsible for Wapic Insurance’s improved efficiency in the period under review.
Asset quality reflects earnings growth
The company’s balance sheet shows sizeable changes in total assets, net assets and total liabilities in March 2018, when compared to the previous period.
Total assets increased by 17.09 percent to N33.49 billion in March 2018 from N28.60 billion as at March 2017.
The key drivers of total assets include an increase in financial assets to N10.48 billion from N9.49 billion; 196.82 percent surge in trade receivables to N2.16 billion from N707.48 million the previous year; 36.79 percent to N2.68 billion from N1.58 billion as at March 2017.
In terms of obligations, total liabilities increased by 42.48 percent to N15.16 billion in March 2018 from N10.64 billion as at March 2017.
Liabilities key drivers entail insurance contract liabilities which increased by 34.45 percent to N9.60 billion in March 2018 from N7.14 billion as at March 2017; 444.18 percent surge in trade payable to N2.81 billion from N516.37 million.
Wapic is a leading West African full line insurance company offering a diverse range of products and services covering life, general and special risk businesses. Founded in 1958 and licensed to underwrite all classes of insurance, such as fire and special perils, goods-in-transit, all risk insurance, and has been listed on the Nigerian Stock Exchange (NSE) since 1990.
Over the last half century, Wapic has garnered experience across Nigeria in risk management and underwriting, and assisting corporate entities and individuals with various classes of cover. Wapic operates two business lines; Wapic Life Assurance Limited which operates in Nigeria, and; a regional footprint in Ghana, Wapic Insurance (Ghana) Limited.
In order to bolster the company’s ongoing repositioning and restructuring initiatives, Wapic merged with Intercontinental Properties Limited; a development which has significantly enhanced Wapic’s underwriting capacity and placed it amongst the top five insurance companies in Nigeria.
Wapic seeks to be a truly diversified financial services institution that provides protection against all forms of insurable risks to all customer segments and become one of the top twenty financial services institutions in Nigeria by 2017.
BALA AUGIE
