Mutual Benefit Assurance Plc has recorded strong underwriting results amid rising inflation, weakened naira and declined oil price, thanks to improved risk retention.
For the year ended December 2016, Mutual Benefit’s underwriting profit increased by 15.78 per cent to N4.18 billion from N3.62 billion the previous year.
The company is profitable and there are no threat to its going concern as combined ratios (CR) of 63.38 per cent, tough higher than the 61.70 per cent recorded last year, is below the 100 per cent threshold.
CR is the combination of an insurance company’s claims ratio and expense ratio.
Actuarists say that the CR ratios are the best way to measure the success of a company because it does not include investment income and only includes profit that is earned through efficient management.
Mutual Benefit is committed to honouring obligations to policy holders while improving customer service as total claims expenses increased by 43.33 per cent to N3.34 billion.
Claims ratios moved to 31.12 per cent In December 2016 as against 30.14 per cent in March 2015. This means the firm has paid N31.12 in claims for every N100 collected in premium income.
Analysts say Mutual Benefits’ mounting claims expenses have become an industry phenomenon since the start of an economic downturn that befell Africa’s largest oil producer as evidenced in increased filing on motor insurance that were ignored before.
The devaluation of the naira by the central bank as a result of the adoption a flexible exchange rate ballooned claims expenses in the books of insurers.
“As at December 2015, exchange rate was N199.7 to the dollar, but by the close of 2016, we all know the result,” said Eddie Efekoha, managing director and chief executive officer of Consolidated Hall Mark Insurance Plc.
“Whilst premium, for instance, was paid on the old sums insured, most of the sums insured on property especially were not reviewed in 2016,” said Efekoha.
In spite of the tough and unpredictable macroeconomic environment, Mutual Benefit grew net premium income in the year by 32.85 per cent to N10.27 billion, from N7.73 billion recorded as at December 2015.
The insurer’s underwriting expenses increased by 23.23 per cent to N2.97 billion in the period under review as total operating expenses rose 19.48 per cent to N5.52 billion.
Mutual Benefits had total assets of N51.46 billion as at December 2016 while shareholders’ fund stood at N6.88 billion the same period.
Few months back, the organisation in collaboration with KPMG embarked on a strategic roadmap for the next 5 years, aimed at repositioning the company for future opportunities and challenges.
The roadmap focused on 4 key areas of its business: market penetration and customer acquisition; customer service delivery excellence, people and culture transformation, and operational effectiveness.
BALA AUGIE
