NEM Insurance plc profit surged 250.70 percent as the Nigeria insurer that provides general and non-life insurance gained for a fifth day, the longest streak in five months.
The stellar performance means the NEM is aggressively making an inroad into the Nigeria’s untapped insurance market and growth in emerging middle-class.
Profit was N1.39 billion in the first three months through March 2015, compared with N396.34 million the previous year, the Lagos-based company said in an e-mailed statement.
The stock rose 8.82 percent to N0.74 by the 1:30 p.m. close in Lagos, the commercial capital, its longest streak of gains since January 6. The shares have also risen 0.54 percent this year.
Gross premium income (NPI) spiked by 22.90 percent to N2.25 billion in 2015, from N1.83 billion in 2014 as the company intensifies its underwriting capacity. Gross premium written moved by 7.07 percent to N3.48 percent, while gross premium earned jumped by 2.65 percent.
While Nigeria’s economic growth has been cut by the World Bank due to a slump in the oil price by more than 40 percent, analysts are optimistic that the reforms put in place by regulators will spike premium income of firms like NEM Insurance.
National Insurance Commission (NAICOM) enforced the rule making coverage compulsory for employees with five or more staff. This policy made major foreign insurance companies race to Nigeria as London-based Old Mutual and Sanlam of South Africa are tapping into the Nigeria market.
Old Mutual acquired Oceanic Life Insurance Limited, a former subsidiary of the defunct Oceanic Insurance Company Limited, while Sanlam bought a minority of FBN Holdings plc life business in 2010.
The regulator also imposed the ‘No premium No cover policy,’ a strategy it said will make Nigeria insurance premium increase fourfold. Premiums will grow to more than N1 trillion by 2017, from N260 billion in 2012, according to the regulator.
Analysts say many assets in the country are not insured, a loophole that needs coverings as it poses hindrance to the growth of the sector.
The sector contributed less than 1 percent to the Nigeria GDP of N80.22 trillion, a figure that is abysmal when compared with the contributions of South Africa and Kenya to their various economies.
NEM Insurance is using the resources of shareholders in generating higher profit as return on equity (ROE) increased to 27.80 percent in 2015 from 7.80 percent in 2014, while the return on assets moved to 27.80 percent in 2015, as against 7.81 percent in 2014.
The company’s assets were N12.30 billion, while market capitalisation stood at N3.90 billion.
BALA AUGIE
