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Staco Insurance Plc has spent more on operating expenses and claims than the premium the insurer generates, which laid bare rising concerns over the insurer’s resilience in the face of a tough and unpredictable macroeconomic environment.
For the first six month through June 2019, Staco Insurance posted a loss after tax of N142.63 million from a loss of N452.14 million recorded in the corresponding period of 2018.
The loss position is brought by a decline in revenue as segments are not contributing to Group revenue and rising underwriting and claims expenses as insurers Africa’s largest oil producers have capitulated to spiraling inflation that lifted the replacement costs of assets.
For instance, the combined ratio stood at 115.75 percent, though lower than 2018’s 132.21 percent, it exceeded the 100 percent benchmark, according to MoneyCentral calculations.
The combined ratio reflects the overall financial health of an insurance company’s underwriting activities. It essentially shows how much an insurance company spends on claims and other operating expenses for every dollar of premium it earns.
A combined ratio below 100 percent suggests profitability, while a ratio above 100 percent indicates an underwriting loss.
The company has paid N371.44 million in claims to policyholders in the first nine months of 2019, which is 53.29 percent lower than 2018’s N512.73 million.
Claims ratio fell to 29.70 percent in the period under review from 45.45 percent the previous year.
A thorough analysis of the financial statement of the insurer shows it is spending its way into the future as expense ratio stood at 86.04 percent in June 2019 from 86.76 percent the previous year.
Gross premium written (GPW) was down 36.95 percent to N1.74 billion in June 2019 from N2.76 billion as at June 2018.
Net premium income (NPI) reduced by 28.16 percent to N1.250 billion from N1.74 billion.
Analysts have said that the company needs to launch market penetrating products so as to stay ahead of the curve and generate reasonable income needed to deliver higher returns to shareholders who are not impressed with the insurer’s performance so far.
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