Wapic Insurance records solid Q2 results amid challenging times

Wapic Insurance Plc, a multi-line West African insurance firm, has beaten analysts’ expectation of a weak performance, as the Nigerian Insurer recorded a solid and excellent second quarter result amid challenging times.

At a time when premium rates and insurance policy terms and conditions are under pressure, Wapic’s gross premiums written increased by 11.72 percent to N4.48 billion in June 2016 as against N4.01 billion as at June 2015.

Also gross premiums income followed the same growth trajectory as it grew by 27.53 percent to N3.52 billion in June 2016 from N2.76 billion in June 2015. Net premiums income rose by 18.13 percent to N2.15 billion in June 2016 as against N1.82 billion the previous year.

The double digit growth at the top lines means the company’s an efficient underwriting capacity supporting proved reserve while contemporaneously launching new and market penetrating products.

The stellar performance is a manifestation of Wapic’s commitment to maintain a strong core book of business serving the needs of its valued clients and their brokers, whilst also bringing down overall risk levels in line with its view of the underwriting opportunity.

These results are clear evidence that the company’s  stated model is working.

The Nigerian insurer is profitable and there are no frets about its going concerns or its ability to continue to exist for the foreseeable future as its 97.23 percent combined ratio (CR), is favorable and below the 100 percent threshold.

The favorable CR culminated in a positive real underwriting performance of N645 million in the period under review.

Wapic is aggressive about claims to policy holders as net claims expenses spiked by 110.09 percent to N1.34 billion in June 2016 as against N567.58 million as at June 2015. Claims ratio which is otherwise known as loss ratio grew  by  62.32 percent in the period under review, to 31.31 percent as at June 2015.

This means the insurance company paid N62 in claims for every N215 in collected premiums.

While a loss ratio below 100 percent signifies good and financial health, Wapic caveat not to pay out more claims than it is receiving premiums. This is because of the impact spiraling payment is having on CR and underwriting profit.

Underwriting profits were down by 67.87 percent to N267.10 million in June 2016 compared with N831.51 million as at June 2015. However net underwriting income were up 18 percent to N2.36 billion in the period under review as against N2 billion as at June 2015.

Despite rising operating expenses and increased claims payment, net income surged by 797.92 percent to N168.63 million in June 2016 from N18.78 billion as June 2015. Profit before tax (PBT) rose by 237.83 percent to N367.70 million as at June 2016.

Wapic’s financial strength has made it become increasingly attractive to foreign investors as it Global Depository Receipts (GDR) is quoted on the international markets.

The board of the Nigerian insurer has established a GDR programme with the Bank of New York Mellon (BNY), according to the company’s website. The GDR is a negotiable instrument denominated in dollars, similar to a stock certificate, which is issued by a US depository bank (BNY) to evidence one or more depositary shares, each of which represent a fixed number of ordinary shares of Wapic. The local custodian bank will be StanbicIBTC Bank plc.

The establishment of the GDR programme will not be accompanied by a listing or capital raising. It is not a new offering of shares and the GDR’s are based on the shares of the Company currently in issue.

Wapic is the first Nigeria insurance company to participate in a GDR program and now joins the ranks of other leading African financial institutions that have established DR programmes.

“We are delighted to have our GDRs quoted on the International market, which will facilitate ownership and holding options for a broader range of investors. This will increase awareness of Wapic’s strategy and transformative growth amongst the US investment community. Wapic continues to deliver on its promise to transform the insurance industry with its strong growth, solid risk approach and governance in Nigeria and Ghana.” Aigboje Aig-Imoukhuede, Chairman of the company. 

Further analysis of the financial statement of the Nigerian insurer shows operating expenses increased by 32.015 to N1.30 billion in June 2016 from N1.16 billion the previous year.

The company has a solid asset base as total assets increased by 10.67 percent to N26.14 billion in June 2016 from N23.69 billion as at June 2015.

The growth in total assets was due to a 67.75 percent rise in financial assets to N7.23 billion and a 162.27 upsurge in reinsurance assets to N2.42 billion.

On the liability side, total liabilities were up by 21.19 percent to N10.58 billion in June 2016 from N8.73 billion the previous year. The increase in total liabilities was as a result of a 47.75 percent rise in insurance contract liabilities to N6.90 billion in June 2016 as against N4.67 billion last year.

Wapic retains ‘B’ of rating for the financial strength given by leading global insurance rating agency, A.M. best.

The rating, which was an affirmation of the company’s financial strength, was also reinforced by an Issuer Strength Rating (ISR) of “BB”-which was credited to the insurer.

Wapic insurance is one Nigerians oldest insurance and most capitalized insurance company, formerly known as Intercontinental. Wapic is now a subsidiary of Access Bank Plc following the bank’s acquisition of the insurance company’s former parent company, Intercontinental Bank Plc.

The company offers a wide range of insurance products and services, and boast of solid industry know how having been in the operations for over 5 decades, according to the company’s website.

Wapic has a market capitalization of N6.69 billion with 13.38 billion total outstanding shares while shareholders fund stood at N15.56 billion as at June 30, 2016.

BALA AUGIE