First Bank Nigeria Insurance Limited aggressive investments in market driven innovative products has spurred the insurer to growth as full year profit and premium income spiked amid a tough operating environment.
These impressive results mean the Nigerian insurer is tapping into the country’s insurance markets that crave for cover.
The 2015 audited financial statement of FBN Insurance showed gross premium written (GPW) spiked by 44 percent to N12.11 billion from N8.41 billion at December 2014.
Also, net premium income increased by 36.50 percent to N10.47 billion in December 2015 as against N7.67 billion as at December 2014.
Gross premium income grew by 39.85 percent to N11.58 billion in the period under review from N8.28 billion in 2014.
The company’s solid risk management practices paid off as net underwriting profits increased by 40.10 percent to N2.76 billion despite rising claims, underwriting expenses and reinsurance expenses.
This also means the Nigerian insurer is effective in the selection of risks while pursing aggressive investment returns.
“Contributions from profitable products such as oil & energy and motor vehicle at may have catapulted underwriting profit,” said an industry analyst who doesn’t want his name mentioned.
FBN Insurance is aggressive about settlement of claims to policy holders as total net claims surged by 184.43 percent to N3.81 billion in December 2015 compared with N1.34 billion in 2014.
As expected, claims ratio increased to 36.36 percent in 2015 as against 17.34 percent in 2014. This means the company spent N36 on claims per head for every N100 collected in premium income.
FBN Insurance is in sound financial heath given its combined ratio (CR) of 51.60 percent in December 2015, which is lower than the 100 percent threshold.
Analysts say the company’s leap forward amid a slow growing economy is commendable.
Africa’s largest economy is struggling with a fall in oil price that is languishing at $40, from over $100 in 2014.
Since oil accounts for two thirds of government revenue and 90 percent of foreign exchange earnings, it is expected that reserves will deplete and economic growth will slow to 2.1 percent, the lowest in a decade.
Consumers will find it hard to buy an insurance cover as inflation has squeezed wallets. This was exacerbated by rising price of food stuffs and menacing fuel scarcity.
Inflation surged to a three-year high of 11.4 percent in February from 9.6 percent the previous month, according to data from the Bureau of Statistics.
Despite the economic lethargy, FBN Insurance’s net income increased by 71.30 percent to N1.85 billion compared with N1.08 billion as at December 2014; driven by growth in GWP, underwriting profit and returns from strategic investment. ‘
Further, investment income increased by 60.16 percent to N1.97 billion as the company continues to increase investment in high yielding investment properties.
FBN Insurance operating expenses were up by 41.66 percent to N2.72 billion, in line with its investment in market penetrating products at the top lines.
The company’s return on equity (ROE) OF 19.47 percent, though lower than 25.47 percent recorded the previous year is one of the highest in the industry.