Goldlink Insurance Nigeria Plc has shown resilience despite a volatile and tough operating environment as the insurer posted an underwriting profit of N612.61 million to end the 2015 financial year.
The 2015 audited financial statement showed the insurer recorded a net underwriting income of N2.13 billion.
Goldlink Insurance has a combined ratio of 73.68 percent in the period under review, which translates to real underwriting performance of N543.38 million, signalling an efficient underwriting capacity.
The combined ratio is a measure of profitability used by an insurance company to indicate how well it is performing in its daily operations.
A ratio below 100 percent indicates that the company is making underwriting profit while a ratio above 100 percent means that it is paying out more money in claims that it is receiving from premiums.
The Nigerian insurer is aggressive about settlement of claims to policy holders as net claims stood at N1.06 billion in December 2015, which represents a 40.11 percent reduction from N1.77 billion recorded the previous year.
Claims ratio fell to 51.45 percent in December 2015 as against 53 percent as at December 2014; this means the firm has spent N51 to generate every unit of premium.
While Goldlinks has a strong underwriting position, a sharp drop in premium income dealt a blow on profitability.
Gross premium written (GPW) was down 22.82 percent to N2.40 billion in December 2015 from N3.11 billion the previous year. Gross premium income (GPI) dipped by 32.17 percent to N2.53 billion in the period under review fromN3.73 billion the previous year. Net premium income fell by 38.32 percent to N2.06 billion in the period under review.
The company posted a loss after tax of N350.20 million to end 2015 financial year while the insurer recorded negative retained earnings of N9.29 billion.
A negative retained earnings means the firm has fallen short of meeting the minimum capital requirement set by National Insurance Commission, and that its ability to take on more risk has been impeded.
Last year, NAICOM, appointed an interim board to manage the affairs of Goldlink after allegations of incompetence were made against the board of the insurer.
Stakeholders say the economic downturn has taken its toll on the Nigerian insurer, which makes it imperative for the new board to carry out a scheme of reorganization and restructuring.
Nigerian insurers were hard hit by an economic downturn since mid- 2015 and early 2017, brought on by a sharp drop in oil price and a severe scarcity of dollars, as they lost premium income in oil and gas and Marine segment of the business.
However, Nigeria’s economy has exited the recession as GDP grew by 0.55 percent in the second of the year, according to a recent report by the National Bureau of Statistics (NBS).
The introduction of the Investors’ and Exporters’ window by the central bank and the subsequent liberalization of the foreign exchange market have eased the flow dollars.
This could translate in improved commercial activities for insurers and a lot of improvement in terms of insurance purchase.
Stakeholders anticipate growth in Industry premium on the back of improved macroeconomic fundamentals.
BALA AUGIE
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