Consolidated Hallmark Plc profit slumped as spiraling claims and operating expenses wiped out gains from strong revenue growth, and the EndSars protest that resulted in a looting spree means the insurer could be exposed to mounting obligations.
For the first nine months through September 2020, Consolidated Hallmark’s net income reduced by 12.19 percent to N456.26 million from N519.61 million as at September 2019.
Total claims expenses spiked by 26.62 percent to N1.78 billion as at September 2020 from N1.41 billion the previous year while loss ratio increased to 39.45 percent in the period under review from 36.62 percent the previous year.
Analysts say the looting spree and vandalism by hoodlums that hijacked a peaceful protest about police brutality could expose insurers to unprecedented mounting obligations.
With the economic downturn caused by the coronavirus pandemic and a low yield environment, many companies could be tipped over the edge.
Industry claims rose 35 percent to N252 billion in 2018 from a year earlier while assets grew by 13 percent to N1.3 trillion, according to the latest available data from the regulator.
There are indications that a lot of insurers may not have the capacity or capital to absorb such risks, but Ganiyu Musa, Chairman of Nigeria Insurance Association, has allayed fears of investors as he said operators in the industry would meet their obligations by drawing from reserves and seeking help from re-insurers.
Despite spiraling claims expenses, Consolidated Hallmark’s underwriting profit increased by 16.41 percent to N1.56 billion as at September 2020 as against N1.34 billion as at September 2019.
The insurers however recorded strong growth in revenue as gross premium earned increased by 12.80 percent to N7.42 billion in the period under review from N6.47 billion the previous year.
A breakdown of revenue figures shows General Accident Business ‘ premium income jumped 24.88 percent to N1.02 billion; Oil and gas, (+23.21 percent to N2.07 billion), but Motor fell by 2.97 percent to N1.63 billion.