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Leadway Assurance Limited, the largest insurer by premium income and asset has recorded a surge in full year profit, thanks to contributions from investment income and gains in fair value asset.
For the year ended December 2017, Leadway Assurance’s net income surged by 82.45 percent to N13.83 billion from N7.58 billion the previous year.
The growth in profit was largely driven by 61.05 percent year on year increase in investment income and net fair value gain on assets of N7.47 billion that help make up for the underwriting loss in the period under review.
Leadway Assurance has yielded returns higher than the risk free rate of return, the market rate of return and the inflation rate respectively as return on equity (ROE) increased to 25.0 percent in December 2017 from 19.52 percent the previous year.
However, the Underwriting firm recorded an underwriting loss of N10.41 billion in the period under review despite a double digit growth in premium income.
The loss was largely due to 1015.15 percent surge in annuity fund to N49.31 billion in the period under review.
Leadway Assurance paid total claims of N27.43 billion in 2017; this represents an 18.95 percent increase from last year’s figure of N23.06 billion as the insurer continues to keep to promise made to customers.
Claims ratios increased to 39.29 percent in the period under review as against 54.70 percent the previous year. In other words, the company has spent N39 in claims out of every N100 generated in premium income.
Some experts interviewed by BusinessDay said that Leadway has the financial strength to acquire or absorb other insurers with weak capital bases. But they added that such a target firm should be seen to add value to underwriter’s business.
For instance, Leadway’s net premium income of N69.81 billion as of December 2017 is more than the N55.37 billion combined premium incomes of AXA Mansard Insurance Plc, Wapic Insurance Plc, NEM Insurance Plc, Consolidated Hallmark Insurance Plc, Law Union and Rock Insurance Plc and Equity Assurance Plc.
What’s more, the underwriting firm’s total assets of N283.78 billion as at December 2017 dwarfs the N251.15 billion of the above insurers.
The insurance industry contributed less than one percent to an economy of $493 billion, a figure that is abysmally poor when compared to the contribution of some Sub Saharan African countries to their economy.
Analysts say tradition and cultural beliefs are increasingly hindering the performances of insurers as many people have refused to take a cover.
Also, lack of awareness about the benefits of insurance, poverty and high unemployment has combined to undermine the industry.
For instance, approximately 1.5 per cent of Nigerians within the insurable class are covered by insurance today, which means the large chunk of the population do not have a cover for risks they encounter on a daily basis.
Despite the above challenges, Leadway Assurance’s gross premium income, Net premium income and net premium income increased by 84.12 percent, 57.42 percent, 69.23 percent to N84.17 billion, N84.61 billion and N69.11 billion respectively in the period under review.
BALA AUGIE
