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Continental Reinsurance Plc recorded strong growth in profit, thanks to commission earned under retrocession arrangement and foreign exchange gains as the insurer continues to launch innovative products that allure customers.
The leading private reinsurer with presence across the continent has very strong balance sheet strength, adequate operating performance and neutral business profile.
For the year ended December 2021, Continental Re’s net income spiked by 80.95 percent to N3.42 billion from N1.89 billion as at December 2020.
Continental Reinsurance return on equity increased to 10.12 percent in December 2021 from 6.41 percent the previous year.
The uptick in profit was strongly supported by foreign exchange revaluation gains of N789.28 million and a 405.10 percent surge in commission earned under retrocession arrangements to N3.28 billion that made up for sluggish premium income growth.
Continental Reinsurance’s underwriting profit grew by 93.61 percent to N2.73 billion in December 2021 from N1.41 trillion the previous year.
It said that this reflected the outcome of targeted underwriting actions during the year including increased underwriting discipline.
However, the reinsurer recorded negative real underwriting results of N1.75 billion due to an increase in the combined ratio.
The combined ratio deteriorated to 104.51 percent in the period under review from 100.64 percent as at December 2019.
It paid N20.45 billion in claims, which is 7.74 percent higher than 2020’s N18.98 billion, and that shows the insurer is honoring obligation to policyholders.
Claims ratio rose to 52.45 percent in 2020 from 49.72 percent in 2019, which means it spent N0.52 on claims to every Naira in premium income.
The company has spent less on underwriting and management expenses to generate premium income as total expense ratio reduced to 52.06 percent in the period under review from 50.92 percent as at December 2019.
Insurance premium revenue was up 14.19 percent to N52.28 billion in December 2020 from N45.78 billion the previous year.
Net insurance premium revenue increased by a mere 2.14 percent to N39 billion in December 2020 from N38.18 billion in December 2019.