AXA Mansard Plc has reported efficient underwriting performance despite claims volatility brought on by rising inflation and currency devaluation.
The composite insurer’s combined ratio improved to 67.35 percent in September 2022 from 71.14 percent as at September 2021, according to MoneyCentral calculations.
That translates to positive real underwriting results of N11.3 billion in September 2022.
Analysts prefer the real underwriting results to underwriting profit as a gauge of underwriting performance; it includes management expenses in its calculus.
The combined ratio is a measure of profitability used by an insurance company to gauge how well it is performing in its daily operations.
A ratio below 100 percent indicates that the company is making an underwriting profit, while a ratio above 100 percent means that it is paying out more money in claims that it is receiving from premiums.
The improvement in combined ratio was supported by a double digit growth in revenue and a reduction in expenses ratio as the insurer spends less on management expenses to generate each unit of premium income.
Total expense ratio fell to 33.68 percent in September 2022 from 35.57 percent the previous year; expense ratio has been reducing since 2015, which gives strength to the underlying underwriting income.
AXA Mansard paid N24.39 billion in claims to policyholders in the first nine months, which is 37.35 percent higher than 2021’s N17.64 billion.
Claims ratio increased to 69.91 percent in the period under review from 65.04 percent the previous year.
Of course, rising inflation means the replacement costs of assets go up, which balloons claims expenses and there are indications mounting obligation looms as inflation is expected to continue to rise to the end of year and into the first quarter of 2023.
Nigeria’s inflation rate surged to 20.77% in September 2022, up from 20.52% recorded in the previous month.
It is noteworthy that the hike in the interest rate by the central bank to stabilize price is a boon for insurers as it bolstered investment returns.
AXA Mansard generated N4.26 billion investment income, which is up 12.05 percent higher than 2021’s N3.80 billion.
The insurer’s gross premium written (GPW) increased by 18.67 percent to N57.89 billion in September 2022 from N48.78 billion as at September 2021.
A breakdown of the gross premium written (GPW) shows revenue from Life (Group Life and individual Life) segment was up 54.88 percent to N11.88 billion as at September 2022. Revenue from Non-Life or General business increased by 5.98 percent to N23.56 billion.