International Energy Insurance (IEI) recorded a solid third quarter results as the Nigerian insurer posted a gross premium income of N2.03 billion amid an adverse operating environment.
The impressive performance has validated the restructuring strategy deployed by the company’s Interim committee inaugurated by National Pension Commission (NAICOM) in 2015.
For the first nine months through September 2016, IEI recorded underwriting profit of N1.69 billion while gross premium income and net premium income stood at N2.03 billion and N1.60 billion respectively.
IEI and other insurance firms are operating in a tough operating environment as premiums income and profits are hard hit by spiralling inflation, high-energy costs and rising claims expenses.
Also, a shortage of dollar that squeezed companies and resulted in mass layoffs means contributory pensions by employees will be lost, hence compounding insurers’ woes.
Experts say the going concerns of these firms are threatened and huge premium income lost given the spate of business closure especially in the aviation, manufacturing and telecoms sectors.
“A slowing down of the economy will necessarily imply a decline in insurance business,” said Funmi Babington-Ashaye MD/CEO Risk Analyst Insurance Brokers Ltd.
Nigeria economy contracted by -2.10 percent in the third quarter of 2016 on the back of lower oil price and a severe dollar shortage, according to data from the National Bureau of Statistics (NBS). The IMF forecasts the GDP will shrink by -1.80 percent by 2016, the worst recession in 25 years.
Inflation rate increased to 17.90 percent for the month of September, driven by high price of gasoline and rising price of foodstuff.
Nigeria unemployment rate was recorded at 13.3 percent in second quarter of 2016, up from 12.1 percent in the three months to March, reaching the highest since 2009, according to the National Bureau of Statistics (NBS).
While other insurance companies have incurred high payout as a result of motor accidents, IEI’s claims ratio fell by 30.71 percent to N859.81 million in the period under review while claims ratio dropped to 47.31 percent in 2016 from 50 percent as at September 2015.
Because more people who have lost their jobs and are demanding for their pensions, insurance firms are forced to soften their rates and adjust risks to encourage consumers suffocating due to economic slowdown.
Insurance business is usually the most hit when there is economic recession,” said Mayowa Adeduro, managing director of Anchor Insurance Plc.
