Consolidated Hallmark Insurance (CHI) Plc’s profit surge to end 2015 financial year has validated the Nigerian insurer’s growth strategy amid a low premium environment.
For the year ended December 2015, the company’s PROFIT BEFORE TAX spiked by 182.70 percent to N545.81 million from N193.07 million in December 2014.
The growth in profit was due to the upward trajectory at the top lines, stoked by the contributions from premium incomes. The stellar performance by the company also means its risk controls and innovative products have paid off.
Consolidated Hallmark underwriting capacity was efficient as underwriting profit moved by 58.7 percent to N1.369 billion in December 2015 compared with N863.24 million as at December 2014.
The Nigerian insurer's profitable products such as Oil and Energy and Motor vehicle insurance may have contributed in bolstering underwriting activities.
Despite challenges such as poverty, lack of awareness about the advantages of taking a cover and cultural beliefs holding back the growth of insurance firms, Consolidated Hallmark recorded a 30.88 percentage GROWTH in gross premium written (GPW) to N6.03 billion in 2015 from N4.62 billion in December 2014.
Gross premium income (GPI) also followed the same upward trajectory as it moved by 25.58 percent to N5.87 billion in the period under review, while net premium income jumped by 26.06 percent to N3.18 billion in December 2015 from N2.53 billion as at December 2014.
Despite Consolidated Hallmark’s impressive performance in the period under review, industry experts posited that 2016 would be a tough year for insurance companies as a slow economy are expected to dampen premium income.
This is because rising inflation on the back of soaring food price and fuel hike as a result of scarcity means many people will be left with little money in their pockets to buy a policy.
Inflation in Africa’s largest oil producer and most populous nation accelerated to 11.4 percent in February, the highest in a decade.
Growth slumped to 2.8 percent last year, the slowest since 1999, and will decelerate to 2 percent in 2016, according to Morgan Stanley.
The insurance industry contributed less than one percent to an economy of N80 trillion ($510 billion), according to the National Bureau of Statistics in its 2014 rebased estimate.
There are positive prognoses for the sector as NAICOM; the body that regulates insurance business has made insurance cover compulsory for employers with more than 5 staff.
Also, the regulator has implemented policies such as TakaFul and ‘No Premium No Policy, in order to deepen penetration in Africa’s largest oil producer and most populous nation.
The 2015 audited financial statement of Consolidated Hallmark showed the insurer is in a strong financial position, as combined ratio (CR) reduced to 61.35 percent in December 2015 from 73.91 percent in December 2014.
A CR lower than the 100 percent threshold means an insurance company has a solid underwriting capacity.
Consolidated Hallmark’s total claims expenses reduced by 1 percent to N958 million in December 2015 compared with N967 million at December 2014. Claims ratio dropped to 30.03 percent in December 2015 as against 38.22 percent in December 2014.
Underwriting expenses were up by 10.25 percent to N1 billion in December 2015 compared with N907 million in December 2014. Underwriting expenses ratio increased to 31.60 percent in December 2015 from 35.88 percent in December 2014.
The company’s reinsurance premium expenses grew by 25.02 percent to N2.68 billion in December 2015 from N2.14 billion in December 2014. Operating expenses were up by 12.80 percent to N1.16 billion in December 2015 as against N1.03 billion in December 2014.
Consolidated Hallmark has a total asset of N7.02 billion as at December 2015, while shareholder’s fund stood at N4.26 billion on the same day. The company’s return on equity (ROE) spiked to 16.52 percent in the period under review as against 5.35 percent the previous year.