UBA Metropolitan Life Insurance Limited return on equity (ROE) jumped 16.78 percent in 2015 from 7.6 percent the previous year, signalling strong profitability that leaves room for the firm to outmanoeuvre the persistent headwinds challenging the insurance sector in Africa’s largest economy.
Profitable results mean shareholders of the Nigerian insurer have effectively utilized the resources of owners in generating profit that more than doubled.
The company’s ROE is the strongest among 16 insurance companies tracked by Markets and Finance.
Industry experts also attribute the company’s stellar performance to the introduction of market penetrating products across a wide spectrum while maintaining a solid underwriting performance.
Net income for the year ended December 2015 was N674.88 million, or N0.6749 per diluted share, compared to N239.13 million, or N0.239 per diluted share for the year ended December 2014.
The spike in net income was primarily due to increases in gross premiums earned for the year ended 2015 compared to the year ended 2014.
The company’s total gross written premium increased by N530 million, or 30.28 percent, to N2.28 billion in December 2015 from N1.75 billion for the year ended December 2014, primarily due to the strong organic growth in new and renewal business generated in all states.
Also, gross premium income followed the same upward trajectory as it increased by 14.91 percent to N2.08 billion in December 2015 from N1.81 billion in December 2014. Net premium income grew by 12.12 percent to N1.81 billion in December 2015 as against N1.61 billion in December 2014.
UBA Metropolitan Life Insurance (MLI) is aggressive about the payment of claims to policy holders as total claims increased by 24.84 percent to N1.22 billion in December 2015 from N977.09 million as at December 2014.
However, claims ratio otherwise known as loss ratio fell to 58.65 percent in December 2015 from 60.68 percent the previous year.
Underwriting expenses were up by 19.40 percent to N933.77 million in December 2015 as against N782.03 million as at December 2014.Underwriting expenses ratios moved to 51.54 percent in December 2015 as against 48.57 percent the previous year.
UBA MLI will have to brace up for a tough 2016 as economic lethargy may undermine premium income of insurers operating in the country
Insurance companies have been hard hit by high unemployment rate, a weak consumer discretionary spending, and foreign exchange restrictions.
This phenomenon has stifled the growth of premium income of insurers Africa’s largest economy.
The loss of jobs across all sectors as a result of the aforementioned challenges means many people will have less money in their pockets to buy a cover. Also, rising inflation means consumer wallets will be hard pressed, leaving very little or nothing to buy a cover.
BALA AUGIE
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