Underwriting firms return to profitability
UNDERWRITING companies in the nation’s insurance industry have bounced back to path of profitability after more than three years of losses as a result of enforcement of regulatory reforms by the National Insurance Commission (NAICOM).
For instance. The enforcement of minimum solvency margin and capital requirements has strengthened investments and policyholders’ protection and confidence in the industry.
Besides, the industry’s seamless transition to International Financial Reporting Standard (IFRS); as well as formulating policy on premium collection and remittance (NPNC).
Specifically, the implementation of ‘no premium no cover’ had ended the vexed issue of unpaid premium in the industry, thus eliminated the issue of paper profit in the industry.
Some of the underwriting companies that have got their 2014 audited financial reports approved by the commission declared profit and paid dividend to shareholders.
For instance, shareholders of Consolidated Hallmark Insurance Plc commended the financial performance of the company despite the difficult operating environment in the country during the yearly general meeting of the company held in Lagos.
According to investors, the company has done exceedingly well and commended the board, management and staff for the good performance which translated to return to profitability.
The Chairman of the company, Ugo Obi Ralph Ezekie, addressing the shareholders said “The results have placed the company again on the path of profitability, a trend which was only broken briefly during the 2013 financial year when significant provision was made for impairment charges. It is good to know that the temporal set back has now been reversed with these results.”
He said “Distinguished shareholders, we have remained firmly committed to the growth in shareholder value over the years. Payment of dividend was being made, although not yearly as envisaged.
According to him, we are unable to effect payment from the results of the 2014 operation since we have only just bounced back to profitability. Our profits, as indicated in the details of the accounts are being reinvested in the business.
However, I am pleased to inform you that the unaudited financial statements of your company for the half year ended 30th June, 2015 is indicative of the improved health in our finances. Our Profit before Tax for the period currently stands at N461 million with retained earnings of N148.015 million.
It is hoped. he said, this trend will be sustained for the rest of the year, and on the account of that, the board has decided to pay an interim dividend of N120 million upon approval.
Your company was able to post a premium income of N4.6789 billion when compared to the N4.151 billion recorded during the 2013 financial year. Your company also recorded an underwriting profit of N863.243 million, compared to N1,057 billion, in 2013.
Profit before tax moved from a loss situation of N181.101 million in 2013 to N205.621 million in 2014. The profit after tax also took a forward leap from a negative position of (N200.555 million) in 2013 to a profit of N193.076 million in 2014.
On the future outlook, he said, the future economic outlook of the country will be quite challenging, against the backdrop of falling crude oil prices and fall in the value of the Naira. However, distinguished Stakeholders, the future of the insurance industry remains very bright giving the existing low penetration rate.
Your company will take full advantage of technology to drive the retail segment of the insurance market.
Also the Chairman NEM Insurance Plc, Chief Adewale Teluwo, said “The company recorded a very good performance during the year under review even though the country’s economy experienced decline towards the end of the year.
The gross premium recorded by the group in the year under review was N9.8 billion as against N8.9 billion generated in the preceding year, an increases of 10.1 per cent. For the parent company, while the gross premium recorded for the year was N9.4 billion that of the preceding yea was N8.3 billion; an increase of 14.4 per cent.
Profit before tax recorded by the group for the reporting year was N1.77 billion while that of the previous period was N544.4 million, a leaping increase of 224.5 per cent. The parent company’s contribution was N1.74 billion and also a leaping increase of 243.3 per cent of the previous year which was N506.9 million.
Law Union and Rock Insurance Plc also posted a gross premium of N4,16 billion for the yea ended December 31, 2014. This performance shows an increase of N.44 billion in 2013.
The company also recorded an underwriting profit of N1.03 billion for the year.
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