Niger Insurance records strong underwriting profit amid economic

Niger Insurance Plc has surmounted the economic headwinds caused by lower oil price, weak currency and severe dollar shortages as the company recorded a strong underwriting performance while keeping combined ratios (CR) below the threshold.

With a proven reserve and efficient underwriting capacity, Niger insurance delivered a return higher than the cost of capital.

For the first nine months through September 2016, the Nigerian insurer recorded an underwriting profit of N1.41 billion, a sign of an efficient underwriting capacity.

The Nigerian insurer’s insurance CR of 66.50 percent, which is lower than the 100 percent threshold, means the company is profitable.

Niger insurance’s net total claims expenses increased by 41.88 percent to N2.09 billion in September 2016 as against N3.67 billion last year. Claims ratios increased to 51.02 percent in September 2016 compared with 43.86 percent recorded last year.

Insurance companies in Nigeria are operating in an adverse operating environment as rising unemployment, spiraling inflation, lower oil and a weak currency continues to hold back growth.

Consequently, insurers forced to soften their rates and adjustment risks in order to encourage some consumers grasping for breath as a result of economic downturn.

Insurance business is usually the most hit when there is economic recession,” said Mayowa Adeduro, managing director of Anchor Insurance Plc.

“This is because people don’t have so much money to spend in times like this, so you are compelled to bring down rates to accommodate reluctant consumers otherwise they may decide to go uninsured,” said Adeduro.

The aforementioned challenges are the reason insurance industry contributed less than 1 percent to an economy of $492.10 billion.

This compares with African countries like South Africa, Namibia and Kenya which have 15.4 per cent, 7.7 per cent, and 3.4 per cent respectively.

Policy holders in Nigeria are pressing for more claims as a lot of them have lost their jobs as a result of the cash strapped economy

Nigeria economy contracted by -2.10 percent in the third quarter of 2016 on the back of lower oil price and a severe dollar shortage, according to data from the National Bureau of Statistics (NBS).The IMF forecasts the GDP will shrink by -1.80 percent by 2016, the worst recession in 25 years.