NIGERIA – NEM Insurance has reported a year-on-year decline in its Profits After Tax in 2021 by 14% to close an N4.4 billion (US$10.6 million) despite increasing its gross premium for the period.
The insurance company particularly took a hit from high underwriting expenses which brought down the underwriting profit for the year.
The report recounts total gross premium written was valued at N27 billion (US$65 million) in 2021, N5 billion (US$12 million) high from the N22 billion (US$53million) the previous year.
However, an N600 million (US$1.4 million) unearned premium pushed the gross premium earned to N26.7 billion (US$64.3 million), an N5 billion (US$12 million) from what was reported in 2020.
The 2021 high earnings reflect a recovery from the COVID year which saw lots of policyholders hold back premium as they had to prioritize their preference scale in 2020.
Reinsurance premium at N7.2 billion (US$17.3 million) last year led to a net premium income of N19.4 billion (US$47.7 million) against the N15.9 billion (US$38.3million) in 2020 on the back of N5.8 billion (US$14million) reinsurance expenses.
The net underwriting income closed at N20.9 billion (US$50.3million) following fee and commission income deductible at N1.4 billion (US$3.4 million), a slight high from the theN1.1 billion (US$2.6million) the previous year.
Underwriting profit closed at N6.6 billion (US$15.9 million) in 2021 up from the N5.98 billion (US$14.4 million) the same period the previous year.
Analysis shows that this was driven by activities in the underwriting expenses at N8.3 billion (US$20 million), which depict a significant year on year on year high of 67%.
This means that the insurer spent more on expenses related to business than it did on actually claimed expenses valued at N16.1 billion (US$14.7million) during the period, and at the same pace as the amount during the previous year.
Other items such as investment income recorded N1.13 billion (US$2.7million) a slight rise from the N1 billion (US$2.4 million) while other income was valued at N484 million (US$1.16 million) during the period.
Also, other operating and admin expenses were valued at US$7.9 million causing the profit before tax to value US$10.6million.
As of today, the total market cap of the insurance firm stood at N3.3 billion (US$38.5 million) despite Insurer’s attempt to upswing its valuation.
The advance was triggered by investors’ increase in the liquidity of the stock which made it tradable and attractive to sellers