Underwriting firm, Lasaco Assurance Plc has reported its lowest nine-month profit in three years in 2021 on the back of a 94.22 percent jump in the claims paid between January and September 2021.
The profit reported by the insurance company slowed by 46.79 percent to N458.99 million in the period ended September 2021 from N862.55 million in the corresponding period of 2020, as analyzed from the unaudited financial result published by the Nigerian Exchange Group (NGX).
Lasaco’s profit in the review period is the lowest the insurance company has reported since 2018 but higher than the N401.24 million recorded in 2017.
The insurance company’s performance was due to the large claims paid in the period under review. Lasaco’s total claims expenses jumped by N3.11 billion to N6.39 billion in the period under review, almost double the N3.29 billion reported in the same period of 2020.
Insurance industry profitability has remained threatened as claims payments grow faster than Gross Premium Written (GPW), according to market analysts.
Read also: Fidelity Bank CEO advises employees on ethics, integrity
According to them, the insurance industry seems to have come under pressure of massive growth in claims far ahead of GPW, a development that brought down aggregate industry profit by 5.1 percent to N16.8 billion in the first half of 2021 against N17.7 billion recorded in the corresponding period of 2020.
The increase in insurance claims was fueled largely by the impact of COVID-19 and the increase in insecurity in Africa’s largest economy, analysts said.
“The development appears to be a reversal of fortunes,” a Lagos-based analyst said, adding that the claims were, however, slowing down.
A breakdown of Lasaco’s nine-month financial result revealed that its performance in the review period was despite the increase in its Net premium income. It was up by 40.37 percent to N6.78 billion in the review period from N4.83 billion in the same period of 2020.
It reported 30.81 percent growth in gross premium written to N10.02 billion in the 2021 financial year, as against N7.67 billion in 2020.
Income from fees and commission on the insurance contract, the commission received on direct business and transactions ceded to reinsurance during the year under review was one of the drivers of the increase in premium income.
Fees and commission income increase to N823.33 million in the review period from N 645.67million in the corresponding period of 2020.
