Linkage Assurance profit surges 56,733% on improved underwriting process

Linkage Assurance Plc has come out of the woods as full year underwriting profit surged 56,733 per cent on the back of improved underwriting process amid a myriad of changes bedevilling the insurance industry.

For the year ended December 2016, Linkage Assurance’s underwriting profit jumped to N720.58 million as against N1.26 million the previous year.

The company’s efficient underwriting capacity was also underpinned by strong growth in premium income and reduction in reinsurance expenses.

Net premium income was up 16.46 per cent to N2.83 billion. Gross premium income and gross premium written increased by 6.60 per cent and 7.68 per cent to N4.03 billion and N3.68 billion respectively.

Linkage Assurance plans to introduce innovative and market penetrating products that will help unlock the value of shareholders.

Such products can bolster premium income and increase the company’s share of a market in its embryonic stage.

“We have developed and launched a number of retail products,” said the company in its 2016 financial statement.

“These include the Linkage Third Party Plus, which is a budget-friendly motor insurance that provides not only the compulsory Third party protection but an additional Own damage protection to the tune of N250,000.”

Analysts say that in spite of Nigeria’s first recession in 25 years, the country’s insurance industry still present a lot of growth opportunities due to low insurance penetration (1.10 per cent).

For instance foreign investors are making an inroad into the industry with a scheme of Mergers and Acquisitions. South Africa’s Liberty Holdings plans to acquire 75 per cent of a Nigerian long-term insurer for 160 million rand ($12 million)

Analysts say M&A and recapitalization will bolster insurers’ capital levels, paving the way for them to underwrite more risk.

Further analysis of the financial statement of Linkage Assurance shows that net income was up 7.11 per cent to N544.50 million in December 2016 from N508.41 billion in December 2015.

The Nigerian insurer is efficient amid a tough operating environment as net margins increased to 19.20 per cent in the period under review from 13.41 per cent the previous year.

Linkage Assurance incurred total claims expenses of N1.72 billion, 28.35 per cent increase from the N1.35 billion recorded the previous year.

The company’s claims ratio moved to 49 per cent in the period under review from 39 per cent the previous year.

Total underwriting expenses were up 27.40 per cent to N1.72 billion in December 2016 while management expenses jumped by N1.08 billion in the same period.

Linkage Assurance underwriting expenses increased to 43 per cent in December 2016 from 36 per cent in December 2015 as management expenses rose to 27 per cent in the period against 25 per cent the previous year.

 

BALA AUGIE AND BUNMI BANJO