ARM Life Insurance Plc, a company quoted on the NASD Plc, recorded improved profit, thanks to a surge in investment income as huge annuity contract liability undermined underwriting performance.
For the year ended December 2017, ARM Life’s net income surged by 324.68 to N453.65 million in December 2017 from N106.82 million the previous year.
The growth in profit was largely driven by a 37.02 percent increase in investment income to N1.28 billion in the period under review that helped make up for an underwriting loss 121.77 million as the firm continues to invest premium income in bonds, equity, and real estate with a view to magnifying shareholders’ earnings.
Insurers in Africa’s largest economy are strengthening their asset allocation strategies in order to boost profit since rising claims and other liabilities result in thin underwriting profit.
However, analysts are of the view that firms have to be cautious while investing such funds as the environment is fraught with risks such as rising inflation and interest rates.
For the year ended December 2017, investment income of 17 insurers that have reported results spiked by 53.24 percent to N48.39 billion from N31.58 billion the previous year.
Despite the tough and unpredictable macroeconomic environment, ARM Life recorded growth in premium income, a stellar performance that validates the firm’s diversified product base.
Gross premium written (GPW) increased by 31.63 percent to N3.62 billion in December 2017 from N2.75 billion the previous year.
Gross premium income (GPI) moved by 30.18 percent to N3.58 billion in December 2017 from N2.75 billion at December 2016.
Net premium income rose by 30 percent to N3.38 billion in the period under review as against N2.60 billion the previous year.
ARM Life is able to turn each naira of revenue into higher profit as profit margin increased to 14.37 percent in the period under review from 4.73 percent as at December 2016.
The Nigerian insurer utilized the resources of shareholders in generating higher profit as return on equity (ROE) increased to 14.65 percent in December 2017 from 4.76 percent as at December 2016.
ARM Life is licensed by the National Insurance Commission of Nigeria (NAICOM) to underwrite life, annuity and health insurance.
ARM Life, formerly known as CrystaLife Assurance Plc, is the insurance subsidiary of Asset & Resource Management Company (ARM) Limited.
Its parent company, ARM, is one of the largest non-bank financial services firms in the country focused on asset management. It manages assets of over N500 billion.
Established in 1994, ARM started operations as a traditional asset management company, specialising in the management of quoted equities and fixed income securities.
