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For two consecutive quarters NEM Insurance Plc has maintained the number spot as the insurer with the strongest return on average equity (ROAE).
With an average ROAE that grew by 9.35 basis points to 28.62 percent as of June 2021, the company has effectively used investors’ money in creating value than peer rivals.
AIICO Insurance Plc recorded ROAE of 23.30 percent; Custodian Investment, (21.33 percent); Regency Assurance, (18.90 percent); Prestige Assurance (18.38 percent); Sovereign Trust, (13.32 percent); Consolidated Hallmark, (13.20 percent); AXA Mansard Insurance, (15.22 percent); Cornerstone Insurance, (12.44 percent), and Varitas, (10.21 percent).
Consistent growth in premium income and ability tame costs are helping NEM Insurance buoy returns on assets.
Its gross premium income was up 35.80 percent to N15.23 billion in June 2021 from N11.20 billion the previous year while net premium income increased by 48.76 percent to N10.92 billion as at June 2020 from N7.34 billion as at June 2020.
NEM saw net income grow by 28.93 percent to N2.01 billion in June 2o21 from N1.56 billion the previous year.
However, industry ROAE has been beaten down by rising claims, underwriting and management expenses, while the low yield environment on the back of central bank’s dovish tone has cast a shadow over future profitability.
Insurers were able to ride out of the coronavirus pandemic as mortality rate was low, and the gradual operating of the economy buoyed premium income.
But rising costs and deteriorating investment income have hindered top line impressive performance to translate into bottom line (profit) growth.
The combined net income profit of the largest companies, which have released Half-Year results, declined by 37.88 percent to N11.96 billion as at June 2021, according data gathered by MoneyCentral.
That compares with 47.48 percent increases in 2020; 2.05 percent uptick in 2019; 5.10 percent reduction in 2018, and 9.52 percent expansion in 2017, according to trend analysis by MoneyCentral.
Analysts say the regulator will have to formulate policies that will make the industry attractive to investors who have been dumping insurance shares.
But the regulator has mandated players in the industry to shore up their capital bases as it wants to ensure that companies can effortlessly underwrite big-ticket deals.
Some insurers are able to ride out of the pandemic crisis and volatile interest rate environment as they recorded improved returns on assets.
AIICO Insurance’s ROAE increased to 23.30 percent in June 2021 from 18.28 percent as at June 2020.
Custodian Investment’s ROAE moved to 21.33 percent in the period under review from 17.96 percent the previous year.
Consolidated Hallmark’s ROAE’s increased to 13.20 percent in the period under review from 7.91 percent the previous year.
Prestige Assurance’s ROAE rose to 18.38 percent in June 2020 from 11.90 percent the previous year.
Universal Insurance’s ROAE increased to 10.37 percent in June 2021 from 2.21 percent the previous year.