Wapic Nigeria Plc has grown revenue and profit at a double digit to start 2017 financial year aimd a tough operating environment.
The company’s favourable combined Ratios (CR) lower than the regulatory threshold means the Nigerian insurer is profitable and its underwriting performance is efficient.
The company recently released its first quarter results, for the first three months ended March, showing net profit increased by 110.15 percent to N265.74 billion as against N126.45 billion the previous period.
The rise in profitability was strongly supported by a 43.07 percent rise in investment income despite rising claims and operating expenses. Profit before tax before tax followed the same growth trajectory as it spiked by 135.09 percent to N384.11 billion in March 2017 from N163.38 billion the previous period.
Increase in net premium income as a result of increased patronage
For the first three months March 2017, the company’s gross premium increased by 24.84 percent to N3.77 billion as against N3.02 billion the corresponding period of 2016 as a result from immense contribution from the company’s diversified product base.
Further insight into Wapic insurance activities in the period under review shows gross premium income increased by 19.44 percent to N2.15 billion in the period under review as against N1.80 billion the same period of the corresponding year of 2016.
Net premium income also followed the same growth trajectory as it went up by 16.51 percent to N1.27 billion, resulting in a 23.47 percent rise in net under writing income to N1.42 billion.
Efficient underwriting performance amid rising claims
Underwriting profit for the first three months through March 2017 increased by 18.77 percent to N425.91 million from N358.58 million in the corresponding period of 2016.
Net claims expenses in the period under review rose by 47.81 present to N462.29 billion in March 2017 from
N463.30 billion as at March 2016.
Claims ratios or loss ratio moved to 53.92 percent in the period under review as against 42.09 percent the previous year.
This means the company is paying out more claims for every naira generated in revenue.
The rise in obligation to policy holders was partly due to a rise in frequency of claims owing to the overall economic downturn.
A combination of lower oil price and a shortage of dollars tipped the country into its first recession in 25 years.
The insurance sector was hard hit by dollar scarcity and the decision of the central bank to adopt a flexible exchange last year that resulted in the local currency losing 40 percent pf its value against the U.S currency.
Analysts say during the renewal of 2015, insurance operators settled claims based on an exchange rate of N196 but today, they pay such claims using the prevailing exchange rate of N400.
Wapic Underwriting expenses were up 4.69 percent to N352.91 million in March 2016 from N337.10 billion the previous period. Underwriting expenses ratios moved to 30.92 percent as at March 2017.
Reinsurance expenses grew by 23.15 percent to N878.70 million in March 2017 from N713.46 million the following year; driven by an increase in driven by an increase in facultative reinsurance to balance exposure on specific risks particularly in the Oil and Energy and Group Life portfolios.
Total operating expenses moved by 22.47 percent to N885.77 million in March 2017 from N723.24 million the previous year.
The rising operating expenses were due to money invested in new product research and development as well as branding and marketing. Also, there was an upgrade of its technology solutions for business processes optimization, greater efficiency and seamless operations to achieve the highest level of customization.
Strong balance sheet validates risk management strategy
Cash and cash equivalents dropped 42.34 percent to N1.28 billio from N2.20 billion as at March 2016; driven by portfolio realignment to take advantage of higher-yeild assets
The 15.40 percent growth in financial assets in the period under review reflects the company’s switch from cash a cash equivalent to take advantage of elevated yield in fixed income securities.
Reinsurance assets increased by 63.69 percent in March 2017 from N1.57 billion the previous year; driven by the growth in reinsurance expenses arising from growth in gross written premium.
Investment property was flattish at N5.39 billion in the period under review, in line with the company’s strategic shift to higher yield assets.
Insurance contract liabilities increased by 25.11 percent to N7.97 billion in March 2017 from N6.37 billion the previous year, owing to growth in gross written premium in the period.
Total liabilities increased by 20.79 percent to N11.27 billion in March 2017 as against N9.33 billion the previous year; key drivers include growth in insurance contract liabilities and income tax liabilities recorded for the period.
Wapic insurance
Shareholders fund rose by 0.36 percent to N16.62 billion in March 2017 from N16.56 billion as at March 2016.
Total assets were up by 7.68 percent to N27.89 billion in March 2017 as against N25.90 billion in March 2016.
Wapic insurance is efficient as net margin moved to 7.04 percent in March 2017 as against 4.21 percent as at March 2016.
Return on equity (ROE) increased to 1.59 percent in the period under review from 0.76 percent as at March 2016.Return on assets (ROA) moved to 0.95 percent in March 2017 from 0.48 percent the previous year.
About Wapic
“Wapic Insurance Plc. is a leading West African multi-line insurance company providing solutions covering life, general and special risks. Established in 1958 and listed on the Nigerian Stock Exchange since 1978, Wapic’s mission is to transform into a diversified financial services institution, delivering value in a sustainable manner to her customers and stakeholders while playing a lead role in the transformation of the industry.
With headquarters in Lagos, Nigeria, Wapic is organized into two core business segments, General and Life Insurance. The Company has two wholly owned subsidiaries, Wapic Life Assurance Limited and Wapic Insurance (Ghana) Limited as well as an associated company, Coronation Merchant Bank Limited.
Through a diverse portfolio of products and a commitment to providing the best customer experience possible, Wapic, with an AM Best Financial Strength rating of “B-” and an Issuer Credit rating of ‘bb-”, has significantly enhanced its underwriting capacity placing it among the top five insurance companies in Nigeria by solvency and capital.”
