…FY Underwriting profit up 45.28%
FBN Insurance Limited full year profit has upsurge on the back of an efficient underwriting capacity as insurers in Africa’s largest economy grapple with soaring claims costs.
The Nigerian insurer’s bottom line (profit) got a fillip from a diversified product portfolio, strong balance sheet, increased investment margins that have combined to drive growth.
For the year ended December 2016, FBN Insurance’s net income increased by 28.64 percent to N2.38 billion as against N1.85 billion the previous year.
The growth in profit was supported by a 24.93 percent decrease in underwriting expenses to N5.93 billion and a 313.51 percent surge in other income.
Underwriting capacity were efficient as underwriting profit was up 45.26 percent to N4.01 billion in December 2016 as against N2.87 billion as at December 2015
FBN Insurance combined ratio (CR) increased to 49.01 percent in December 2016 from 43.31 percent as at December 2015.
A CR below 100 percent means a company is in good financial health and there are no threats to its going concerns.
While First Bank Insurance recorded an 18.73 percent reduction in claims expenses in 2016, most firms in the industry have seen settlement to policy spiral up on the back of foreign exchange scarcity and climate change.
Also, a recession, the country’s first in 25 years, attracted many people to claims late last year and early 2017. Nigeria’s economy contracted by 1.50 percent in the fourth quarter of the year.
The Nigerian Insurers Association (NIA), Eddie Efekoha, narrating the operators’ claims experience during the year 2016, said during renewals in 2015,when premiums were paid, it was paid based on old Naira exchange rate to dollar which was N196.00 to a dollar but now claims are paid based on current exchange rate which is over N400.00 to a dollar.
These challenges are an indication that FBN Insurance’s claims ratio could spike in the first quarter of the year as the amount it paid to policy holders before the naira weakened could have weakened.
The Nigerian insurer’s claims ratio fell to 23.89 percent in the period under review from 27.91 percent the previous year.
Insurance operators in Africa’s largest economy have had lack of trust for a policy, economic downturn, obsolete technology, lack of skilled labour crimp growth.
Little wonder the industry’s contribution to the GDP was less than one percent, lower than the 15 percent contribution of South Africa’s insurance sector to its economy.
The aforementioned challenges showed face in the book of FBN Insurance as gross premium written (GPW) increased by 6.87 percent to N9.75 billion in the period under review.
FBN Insurance total assets spiked by 41.43 percent to N31.71 billion while shareholders fund stood at N8.04 billion as at December 2016.
BALA AUGIE
