Wapic Insurance surmounts economic downturn as premium income rises  

Wapic Insurance Plc, the company that offers insurance services in pension, general, and risk business has surmounted the economic downturn hitting companies hard as the Nigerian insurer recorded a strong premium growth and improved bottom lines.

For the first three months through March 2016, Wapic’s gross premium income increased by 27.81 percent to N1.80 billion from N1.41 billion as at March 2015.

The Nigerian insurer has a strong underwriting capacity as net premium income was up by 21.24 percent to N1.09 billion while gross premium written increased by 11.28 percent to N3.02 billion in the period under review.

Experts attribute the company’s upward trajectory to its innovative products and a good risk base pricing strategy amid a low penetration environment.

While Wapic is thriving at the top and bottom lines, insurance companies in Africa’s most populous nation are struggling with a slow growing economy.

The economic downturn resulted in reduced volume of activities at the ports as manufacturers are unable to import most of raw materials due to dollar scarcity.

Consequently, insurers lost significant revenue they would have realised from Insurance on Goods in Transit.

“If they are moving less goods, they have less to insure,” said Afolabi Lawal, Finance Controller of Aiico Insurance Plc, by phone.

Goods in Transit Insurance provide insurance from the point of loading to destination.

The Central Bank of Nigeria banned 41 items from its official markets and pegged the currency at between N197-N199. It said such policy will help curb inflation and protect a reserve that is hard hit as a result of a significant drop in oil price.

Industry experts say the policy has forced some manufacturers to close shops.

“The foreign exchange is not favourable to the economy,” said Moronfola Olaseni, an actuary with Wapic Insurance Plc, in a note to BusinessDay.

“The reduction in oil price is affecting the some oil and gas insurance. It has impacted negatively on marine insurance,” said Olaseni.

Wapic recorded a 14.91 percent rise in net income to N126.45 million in 2016 as against N110.04 million in 2015.

The company is financially strong and efficient as its combined ratio (CR) of 73.43 percent is below the 100 percent threshold.

BusinessDay calculation reveals the CR the previous year stood at 53.14 percent.

Further calculations reveals the rising CR was a result of spiralling claims expenses, driven largely by an increase in gross IBNR for the period.

Claims expenses surged by 148.34 percent to N463.30 million in the period under review.

Wapic share price closed at N0.50 on the floor of the exchange while market capitalization was N6.69 billion.

 

BALA AUGIE