Reduced combined ratios lift Ensure Insurance     

Ensure Insurance Plc’s ability to reduce its exposure to risk by lowering combined ratios is responsible for the company’s profit position amid a challenging operating environment that undermines regulators plans of deepening penetration by 2017.

For the year ended December 2015, Ensure Insurance (EI) posted underwriting profit of N344.29 million from a loss position of N22.83 million it recorded the previous year.

The strong under writing performance was due to a tremendous reduction in combined ratio (CR) to 70 percent in 2015 from 103 percent as at December 2014.

A CR in the insurance world is the combination of claims ratio and expense ratio.

When the CR is under 100 percent, underwriting results are generally considered profitable; when the combined ratio is over 100 percent, underwriting results are generally considered unprofitable.

As a result of falling CR ratio, Ensure Insurance recorded positive real underwriting results of N693 million, which means the insurer is above the curve.

Ensure Insurance stellar performance is not a representation of the industry as a slow economic growth, lack of awareness about the importance of cover and superstitious beliefs among the people continues to dampen premium penetration.

These challenges has cast doubt on the National Insurance Commission plans to more than triple the value of its insurance market by next year.

NAICOM, in 2013, through its former Director, Daniel Fola, had said   the value of insurance contracts should rise to about N1 trillion ($6.4 billion) in 2017, about 3 percent of gross domestic product, from N300 billion naira now, or less than 1 percent of GDP.

As a result of the aforementioned doldrums, Ensure Insurance top lines was hit as net premium income fell by 25.96 percent to N2.31 billion in 2015 as against N3.12 billion in 2014.

Gross Premium Written (GPW) reduced by 26.60 percent to N2.87 billion while Gross Premium Income (GPI) dipped by 24.55 percent to N2.98 billion.

Further analysis of the financial statement of the Nigerian insurer  showed underwriting expenses dropped by 71.49 percent to N487.42 million in 2015 from N1.71 billion as at December 2014.

Underwriting expenses ratio fell to 21.08 percent in 2015 from 54.05 percent in 2014.

A lower underwriting expense signifies the effectiveness of the cost control put in place by management of the company.

Ensure Insurance is less aggressive about settlement of claims to policy holders as total net claims expenses fell by 25.16 percent to N1.13 billion in December 2015 compared with N1.51 billion as at December 2014.

Ensure Insurance was formally known as Union Assurance after changing its brand entity.

BALA AUGIE