Leadway Assurance underwriting performance improves on reduced expenses

The underwriting performance of Leadway Assurance Limited has improved to 78.90 per cent in December 2016 from 133.30 per cent the previous year, driven by a reduction in expense ratio that resulted in an underwriting profit of N10.53 billion.
For the year ended December 2016, the largest insurer by market share saw expense ratio dipped to 23.05 per cent from 97.42 per cent as at December 2015; driven by a management control on such costs like broker’s commission, acquisition cost, incurred losses and actuarial review of loss history.
As a result of a dip in expenses in the period under review, the largest insurer by market share recorded a real underwriting performance of N11.32 billion from a negative figure of N7.10 billion recorded in 2015.
Leadway Assurance recorded this stellar performance amid an economic downturn brought on by a sharp drop in the oil price since mid-2014 and a severe dollar scarcity that tipped the country in its first recession in 25 years.
The aforementioned economic downturn hindered companies and households from taking up a cover as cash low and consumer purchasing power were pressured.
To exacerbate the already anaemic position of insurers was the incessant attack by militants on oil facilities that made many companies abandon the rigs. Many insurers lost premium they could have earned from oil and gas.
Leadway Assurance could even record a better performance in 2017 when it releases its results as the country exited a recession on the back increased oil output, contributions from the Agric sector and the relative peace in the Niger Delta region.

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The economy grew by 0.55 per cent and 1.50 per cent in the first and second quarters of the year, according to a report by the National Bureau of Statistics (NBS).
Also, there has been improved foreign exchange (FX) liquidity since the central bank introduced the Investors’ and Exporters’ (I and E) window and the subsequent liberalization of the market.
Data from the website of the Central Bank of Nigeria reveals that as of 14th of December 2017, Nigeria’s external reserve increased by $ 990,029,515 to $ 36,853,971,499 from $ 35,863,941,984 recorded on 7th of December 2017.
Leadway Assurance’s robust capital means it can take on more risk and fund future expansion plans such as the acquisition of small competitor as solvency margin ratio stood at 66.30 per cent, though lower than the 94.10 it recorded the previous year.
The Nigerian insurer has a shareholders’ fund of N26.48 billion as of December 2016, which is higher than the N38.82 billion it recorded in 2015.
The rise in shareholders funds’ fund validates the Nigerian insurers’ consistent profit position as return on equity (ROE) increased to 39.30 per cent in December 2017 from 14.40 per cent the previous year.
Leadway Assurance’s loss ratio otherwise known as claim ratios increased to 55.96 per cent in the period under review as against 23.05 per cent the previous year; this validates the single-digit growth in premium income.
Claims expenses spiked by 61.15 per cent to N23.06 billion in the period under review as against N8.71 billion as at December 2015.

 

BALA  AUGIE