By EMEKA EJERE |
Innovative moves by Wapic Insurance Plc to pat down the adverse effects of recession on its top line earnings has seen the insurer raise its half year (H1) 2017 premium by 31.47 per cent year-on-year.
The aggressive drive for new businesses and written premiums helped drive its profit higher, with the company posting an increase in after tax income of 134.64 percent to N395.69 million.
The insurance underwriter continues to generate increased return on equity (ROE), while steadily growing its capital base.
Strong underwriting results, favourable combined ratio (CR), and stable investment income are providing solid growth for the risk assurer’s book value per share.
For the first six months through June 2017, Wapic’s underwriting profit spiked by 103.32 percent to N622.08 million as against N305.95 million earned in June 2016.
This profitability was underpinned by improvement in the combined ratio, which fell to 88.87 percent in the period from 95.83 percent as at June 2016.
A combined ratio below 100 percent indicates profitable underwriting results for an insurance company; combined ratio over 100 percent indicates unprofitable underwriting results.
Wapic Insurance has navigated the storm of uncertainties as return on equity (ROE) moved to 2.30 percent in the period under review from 1.0 percent the previous period.
Shareholders fund was up 3.44 percent to N17.13 billion in June 2017, from N16.56 billion the previous year.
The company maintained a robust assets base as total assets increased by 10.61 percent to N28.65 billion in the period under review, underpinned by a 35.67 percent increase in financial assets.
Wapic Insurance other other operators in the industry are operating in a volatile macroeconomic environment as a sharp drop in oil prices since mid-2014 and shortage of dollars tipped the country to its first recession in 25 years.
Economic activities have been slow while rising cost of living damped consumer appetite for a cover. Companies and businesses scaled back on expansion plans. Many oil firms cut insurance costs.
Experts have identified low awareness as responsible for the industry’s underperformance. The industry contributed less than 1 percent to an economy of $492 billion, based on 2014 rebased estimates.
Despite the aforementioned challenges, Wapic’s gross premium income (GPI) grew by 29.37 percent to N4.58 billion in June 2017 from N3.54 billion as at June 2016. Net premium income was up 28.24 percent to N2.17 billion.
As a result of a weak currency, Wapic insurance’s net claims expenses increased by 20.89 percent to N1.62 billion in June 2017 from N1.34 billion the previous year.
Eddie Efekoha, Chairman of Nigeria Insurer Association (NIA), said that the exchange rate has pushed up insurance claims as the premiums of insurance policies whose claims are presently settled were paid when the exchange rate was low.
The Naira lost 40 percent of its value against the U.S currency when the central bank adopted a flexible exchange rate in June 2016, but a new foreign exchange window introduced by Nigeria’s central bank eased liquidity in the foreign exchange market.
Wapic Insurance’s operating expenses were up 5.61 percent to N2.07 billion while underwriting expenses rose by 18.84 percent to N2.46 billion.
The company has launched a new product called Wapic Smart as it aggressively seeks to improve the saving culture of customers.
A recent statement by the firm indicates that the product would help to build a sustainable savings culture particularly where it concerns specific financial goals or objectives.
The Managing Director, Mrs. Yinka Adekoya, observed that it was difficult to make progress without a plan and goals.
She said Nigerians should not view saving as something to be done when there was excess money, but as an activity that is as important as eating food for survival.
According to Adekoya, Wapic Smart products would provide more options to choose from, with the addition of a life insurance cover. She observed that financial institutions, from banks to insurance companies, were daily clamouring to sell the best savings product, but few attached huge benefits to their offerings.
Adekoya said: “This is why it makes a lot of sense to say that Wapic has done its homework by developing products that are tailored towards specific needs and with enticing benefits to go with them.
“The products basically give one the chance of efficiently amassing reserves, towards meeting commitments, and carrying a life cover. So, this implies that for the period you save, you are covered.”
Over the last half century, Wapic has garnered cognate experience across a wide segment of the Nigerian economy in risk management and underwriting, assisting corporate entities and individuals with various classes of cover.
The company operates two line wholly owned business lines; Wapic Life Assurance Limited which operates in Nigeria and; a regional footprint in Ghana, Wapic Insurance (Ghana) Limited, as its subsidiaries.