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Consolidated Hall Mark Plc started the year with a 16.13 percent growth in revenue while obligations to policy holders continue to mount.
For the first three months through March 2017, the insurer’s gross premium income (GPI) increased to N1.94 billion from N1.67 billion the previous year.
A breakdown of the insurer’s financial statement shows individual segments of the business contributed to top line (revenue) growth.
Gross premium income (GPI) from Motor business increased by 24.72 percent to N547.85 million in the period under review from N439.56 million at March 2017.
Gross premium income from oil and gas grew by 26.40 percent to N418.66 million in March 2018 from N339.13 million the previous year.
Gross premium income from fire business rose by 19.93 percent to N318.21 million in the period under review from N265.94 million as at March 2017.
While Consolidated Hall Mark’s revenue rose amid a tough and unpredictable macroeconomic environment, rising claims expenses resulted in a fall in bottom line (profit) despite an increase in investment income.
Claims expenses surged 115.40 percent to N615.12 million in March 2017 from N285.05 million the previous year.
Claims ratio otherwise known as loss ratio increased to 42.17 percent in the period under review as against 23.10 percent the previous year.
This means the insurer is spending more on claims expenses to generate each unit of revenues (premiums).
Analysts have attributed rising claims among insurance firms in Africa’s largest economy to awareness and foreign exchange movement as a weak Naira balloon reserves.
As a result of the huge total underwriting expenses, Consolidated Hall Mark’s net income fell by 31.01 percent to N209.64 million in March 2018 from N303.90 million.
Similarly, underwriting income fell by 30.01 percent to N451. 19 million in the period under review from N586.63 million the previous year.
Consolidated Hall Mark has concluded the first phase of a N500 million rights issue as the company plans to use the proceeds of the capital raising to strengthen working capital and fund its future expansion plans.
The insurer’s total equity otherwise known as shareholders’ fund increased by 15.17 percent to N5.39 billion in March 2017 from N4.68 billion.
Consolidated Hall Mark has enough buffers to settle all claims in extreme situations as evidenced in a favorable solvency ratio.
The insurer’s solvency ratio stood at 354.60 percent in the first quarter of 2018.
A solvency ratio measures the extent to which assets cover commitments for future payments, the liabilities. The solvency ratio of an insurance company is the size its capital relative to all risk it has undertaken.
The ratio is calculated as the amount of Available Solvency Margin (ASM) in relation to the amount of Required Solvency Margin (RSM). The ASM is the value of the company’s assets over liabilities, and RSM is based on net premiums.
For instance in India, insurers are required to maintain a minimum ratio of 1.50 or 150 percent.
BALA AUGIE
