AIICO Insurance, AXAMansard Insurance, NEM Insurance Plc, and Mutual Benefit Assurance Plc have helped to lift listed insurers premium income in the first quarter (Q1) , thanks to innovative products making an inroad into the Nigerian market.
However, widespread poverty and Covid-19 crisis has pared predictions over future earnings growth.
The combined gross premium income of fourteen largest insurers quoted on the bourse increased by 16.91 percent to N83.49 billion in March 2020, from N71.41 billion the previous year.
Data compiled by Money Central showed net premium income was up 14.81 percent to N60.36 billion in March 2020 as against N52.57 billion the previous year.
Experts and ratings agencies have warned that Nigeria’s high unemployment rate and tough operating and macroeconomic environment will stunt Insurance growth in a country where the industry contributes less than 1 percent to GDP.
Fitch Ratings, one of global ratings agency said in spite of Nigeria’s large population, only a small proportion purchases life insurance whose premium currently accounts for 41.9 per cent of the overall insurance spending in the country.
The rating agency stated this in its latest Nigeria Banking and Financial Services Report.
Low income and a lack of understanding of the benefits of life insurance remain the most important obstacles facing life insurers, it stated.
“We see strong growth in life premiums over the medium term to reach N217.96 billion by 2024. We forecast premiums in the larger non-life insurance market to increase by a revised 2.9 per cent rate in 2020 to reach a level of N248.85 billion,” the ratings agency said.
“We expect this trend in growth trajectory to continue over the medium term with non-life premiums reaching N321.53 billion by 2024,” they summed.
A breakdown of first quarter results for listed insurers showed AIICO Insurance, the largest listed insurer by total assets saw gross premium written increase by 22.53 percent to N17.55 billion as at March 2020 from N14.32 billion the previous year.
The insurers Life business- that makes up 61.50 percent of revenue- was up 34.49 percent to N10.80 billion in the period under review as against N8.03 billion the previous year; non-life business moved by a mere 6.91 percent to N4.64 billion as at March 2020.
AXA Mansard Insurance Plc, the largest insurer by market capitalization, saw gross premium income spike by 20.75 percent to N21.03 billion as at March 2020 from N17.42 billion the previous year.
Drilling down the numbers showed non-life- which makes up 47.64 percent to total revenue- jumped 10.71 percent to N10.02 billion as at March 2020, and AXA Mansard Health (HMO) was up 57.26 percent to N7.36 billion in the period under review.
NEM Insurance’s gross premium written increased by 16.41 percent to N7.91 billion as at March 2020 from N6.80 billion the previous year.
Mutual Benefits Assurance’s gross premium written was up 18.04 percent to N18.69 billion as at March 2020 as against N15.84 billion the previous year.
Insurers should brace for tough times as the coronavirus pandemic that paralyzed business activities across the country has led to weak volume of transactions, as there has been a surge in health, travel/business interruptions, supply chain and event cancellation claims.
That’s a double whammy for an industry where most companies trade below N0.50 per share as investors do not see any growth potentials.
To boost the capital of insurers so that they can take on more risk and magnify earnings, the National Insurance Commission (NAICOM) had jerked up the minimum capital requirements.
However, the regulator has postponed the deadline for implementing the regulation till the first quarter of 2021 due to COVID-19 crisis.