…..Gross premium written up 20.06 percent in FY16
Continental Reinsurance full year profit surged 45.33 percent on the back of a material foreign exchange gains as the
Nigerian insurer continues to grow premium amid an economic downturn.
For the year ended December 2016, Continental Re’s profit was N3.11 billion, from N2.11 billion recorded the previous year.
Gross premium written, Insurance premium revenue and net insurance premium revenue were up 13.88 percent, 22.41 percent and 20.06 percent to N22.40 billion, N25.31 billion and N21.84 billion respectively.
The growth at the bottom line (profit) was strongly supported by a material foreign exchange gain of N4.06 billion, owing to the rise in the value of foreign denominated assets relative to the Naira.
Continental Re’s consistent stellar performance earned it affirmation credit ratings by A.M Best.
A.M Best said the ratings of the insurer was based on its strong, albeit declining, consolidated risk-adjusted capitalisation, solid operating performance and established profile in its core domestic market.
Analysts say the company’s upswing in premium was due to the No Premium No Cover Policy that ensured the timely collection of revenue .
A.M. Best expects Continental Re to adopt a prudent capital management strategy to ensure the company can adequately support its strategic initiatives.
While Continental Re has seen an upswing in earnings in the period under review, insurance companies in Africa’s most populous nation are operating in a harsh and unpredictably macroeconomic environment.
Indeed 2016 was a horrendous year because many businesses scaled back on expansion plans and jobs were shed on the back of a severe dollar scarcity caused by a sharp fall in oil price.
Many insurers were hard hit by an ailing economy because premiums were lost as a result of the aforementioned quagmire.
Nigeria’s GDP shrank by 1.50 percent in the third quarter of 2016, according to report by the National Bureau of Statistics (NBS).
In spite of the economic downturn, Continental Re remained profitable as its combined ratio (CR) of 96.03 percent, though higher than the 98.62 percent, is lowest than the 100 percent threshold.
The company’s underwriting expenses increased by 42.14 percent to N10.49 billion in December 2016 from N7.39 billion the previous year while expense ratio moved to 48.03 percent in December 2016 compared to 40.57 percent the previous year.
This means more money is going into advertising and administrative costs.
Total claims for the period jumped by 30 percent to N11.70 billion in the period under review from N9.04 billion as at December 2015. Total assets were up 35.70 percent to N40.25 billion, driven by reinsurance receivables.
The board of Continental Re has proposed a final dividend of N0.14 on its ordinary shares. This translates to a dividend yield of 12.60 percent.
Return on average equity (ROE) stood at 15.77 percent in December 2016 from 13.78 percent as at December 2015; this signal the efficient deployment of owner’s capital in generating higher profit.
BALA AUGIE
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