Niger Insurance falls of the cliff as profit drops

The Board of Directors and management of Niger Insurance Plc should intensify their market penetrating strategy as the company fell of the cliff and landed on rotten ice after premium shrunk, resulting in a drop in profit.

Analysts are of the view that the continued unimpressive performance of the Nigerian Insurer at both the top and bottom could make it practically difficult for the company to maximize the value of its shareholders who crave for a higher returns on their investment.

The audited 2016 financial statement of Niger Insurance showed net income drop by 92.98 percent to N42.13 million compared to N600.91 million as at December 2015.

The sharp drop in profit was due to a 43 percent reduction in gross premium written to N5.96 billion in the period under review from N10.46 billion as at December 2015.

Gross premium income and net  premium income followed the same downward trajectory as they fell by 52.08 percent and 53.72 percent  to N5.07 billion and N5.96 billion respectively.

Niger Insurance underwriting capacity was inefficient as underwriting profit was down 71.86 percent to N888.89 million from N3.15 billion as at December 2015.

The Nigeria insurer has been operating in an unpredictable and tough macroeconomic environment.

Insurance firms felt the pinch of a lower oil price, a weak naira and a shortage of currencies.

Many firms lost premium they could have earned from marine insurance as oil companies abandoned the rigs after devastating attacks on facilities by the Niger Delta avengers.

Analysts say during a period of recessions, when companies are laying off staff and cutting back on expansion plans because of shrunken cash flows, insurance firms suffer huge revenue loss  as individuals will lose the appetite to take up covers.   

Nigeria’s economy fell by 0.52 percent in 2016, the first recession in 25 years, according to the National Bureau of Statistics (NBS).

Inflation for the month of May stood at 16.25 percent as consumer spending power is eroded.

Nigeria’s unemployment rate rose to 14.2 per cent in the fourth quarter of 2016, the National Bureau of Statistics (NBS), has said.

Niger Insurance’s total claims expenses fell by 39.72 percent to N2.69 billion in December 2016 from N4.46 billion as at December 2015.Claims ratios increased to N45.51 percent in 2016 compared to 42.51 percent the previous year.

The Nigerian insurer’s underwriting expenses dipped by 55.73 percent to N1.09 billion while total operating expenses reduced by 10.50 percent to    N2.82 billion in the period under review.

Niger Insurance’s total assets were up 7.19 percent to N21 billion in December 2016 as against N22.51 billion the previous year while shareholder’s fund stood at N8.66 billion.

BUMI BANJO