Royal Exchange Insurance Plc solid leap in premium income signals customers are increasingly buying the company’s products, as underwriting performance was solid amid a tough operating environment.
The Nigerian insurer has given an olive branch to owners, as a solid earning, the launch of innovative products and an organic and inorganic growth strategy, will culminate in a high return on investment.
For the first six months through June 2016, Royal Exchange’s gross premium written increased by 34.31 percent to N8.43 billion from N6.27 billion as at June 2015. Gross premium income moved by 17.40 percent to N6.45 billion in June 2016 as against N5.50 billion in June 2015.
Net premium income moved by 5.24 percent to N4.33 billion in June 2016 from N4.12 billion as at June 2015.
Experts say the impressive at the top lines means the company’s underwriting performance is efficient.
Royal Exchange is profitable and its growing concerns are not threatened since its combined ratios (CR) of 75.75 percent is lower than the 100 percent threshold.
The combined ratio is the summation of underwriting expenses and loss ratios.
A low CR culminated in positive real underwriting profit of N1.05 billion in the period under review while underwriting profit stood at N1.32 billion.
In order to undertake more ticket risks in the nation’s insurance industry, consolidate its balance sheet and increase the value of the shareholders, Royal Exchange plc has announced plans to list N3 billion bonds on the Nigerian Stock Exchange (NSE) in October 2016.
“By October 2016 we want to play big in the Nigerian insurance industry and with the need for more capital in the industry, we are re-strategising to make sure that we have the required recapitalisation to play bigger and take the opportunity in the insurance industry.” says Auwalu Muktari, group managing director of the company.
Royal exchange is aggressive about the payment of claims to policy holders and meeting its obligations as total net claims increased by 42.50 percent to N1.94 billion, while claims ratio moved to 44.80 percent in June 2016 as against 33.13 percent as at June 2015.
This means out of every N100 generated in revenue, the company paid N44.80 in claims.
Despite a tough operating environment, the Nigerian insurer’s net income remained flattish at N171.13 billion.
Companies operating in Africa’s largest economy have been grappling with high inflation rates, foreign exchange volatility, decrepit infrastructure and a high interest rate environment. These challenges make it difficult for insurance companies to strive.
BALA AUGIE
