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Mutual Benefits Assurance Plc has navigated the storm of headwinds as the insurer returned to profit on the back of increased investment income.
This stellar performance means the company is steadfast in its primary objective of maximizing the stakeholders’ wealth.
For the year ended December 2017, Mutual Benefit’s posted a profit after tax of N1.02 billion from a loss of N1.34 billion recorded in 2016.
The impressive performance was driven by a 174.09 percent surge income from treasury bills of N910.82 million in the period under review.
Income from treasury bills form part of investment income of insurers.
Some financial institutions made money from short term government securities when yields were between 18 percent and 22 percent from late 2016 to September 2017 as government intensified issuance of treasury bills to fund a budget deficit and curb inflation.
However, yields on treasury bills have fallen to an all time low of 12 percent as government launch an aggressive Eurobond issuances in order to reduce domestic debt and reduce borrowing costs.
Mutual Benefit’s gross premium written increased by 15.66 percent to N14.03 billion in the period under review from N12.13 billion as at December 2018.
A breakdown of gross premium written shows Mutual Plc Nigeria, a subsidiary of Mutual Benefit Assurance, recorded a 10.79 percent in increase in gross premium written.
Mutual Limited Nigeria, another subsidiary of the Group, saw gross premium written increase by 14.02 percent to N4.96 billion in the period under review.
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 N8.07 billion in December 2017 from N6.51 billion as at December 2016.
Further scrutiny of the financial statement shows net claims grew by 54.19 percent to N5.15 billion in December 2017 from N3.34 billion the previous year. Change in life fund, a component of net claims expenses slumped by 97.35 percent to N4.27 million period under review from N161.53 million.
Claims expenses ratio otherwise known as loss ratio increased to 44.93 percent 31.21 in December 2017 from 32.15 percent as at December 2017. This means the insurer has spent more on claims expenses to generate every N100 in premium income.
Underwriting expenses were flat at 8.13 N2.94 billion in the period under review.
Underwriting expenses fell to 25.63 percent in December 2017 from 28.91 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.
The year 2016 was horrendous for firms in Africa’s largest economy and populous nation as a slump in crude oil price resulted in a severe dollar shortage that made it practically difficult for firms to source dollars.
Mutual Benefits Assurance Plc has announced plans to raise additional capital of N2billion through right issue to boost operation and grow market share.
The issue will enable the insurer strengthen its capacity for bi ticket risks and as well as competitiveness.
BALA AUGIE
