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Thursday, March 23, 2023

Cornerstone Insurance Profit Surges on Improved Underwriting Performance

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The underwriting performance of Cornerstone Insurance Plc has improved markedly, leading to a surge in first quarter profit as the insurer is redoubling efforts toward meeting the recapitalization dead line by the regulator.

While the combined ratio of 105.51 percent as of the first quarter of 2021 is higher than the 100 percent benchmark, it is far below the 159.62 percent recorded in 2020.

Also, the negative real underwriting writing results reduced to N155.37 million in March 2021 from N845.71 million the previous year, according to MoneyCentral’s calculation.

The real underwriting results recognise the three components of cost: claims expenses, underwriting expenses, and management expenses in its calculations; however, the underwriting profit considers only the claims and underwriting expenses.

Cornerstone Insurance is earning more in revenue than it is paying out in claims as loss ratio fell to 42.11 percent in March 2021 from 71.28 percent the previous.

Also, it is spending less on operating and underwriting expenses to generate premium income, which underscores its cost control mechanism put in place by management and board of directors.

Operating expense ratio reduced to 34.45 percent in March 2021 from 51.25 percent the previous year while underwriting expenses dipped to 28.95 percent in March 2021 from 36.81 percent as at March 2020.

Interestingly, the cost measures pave the way for top line (revenue) impressive performance trickle down to bottom line growth as net income spiked by 38.52 percent to N658.15 million in March 2021 from N475.11 million the previous year.

The company is honoring its obligations to policyholders, which means it has enough liquidity to match liabilities even amid the tough operating environment.

It paid N1.18 billion in claims in the period under review, which is 16.78 percent higher than 2019’s N1.015 billion.

Analysts say the company has been implementing policies that are yielding fruit even amid an unfavorable underwriting environment.

A lot of insurers are grappling with huge operating costs and the costs are growing faster than profit growth. They spend a lot of money on diesel oil to run generator plants at the head office and branch offices across the country.

That is on top of acquisition of latest technology and skilled talents, while the wage bills are piling up and there is likelihood that workers will demand higher pay to compensate for inflationary pressures.

Despite the myriad of challenges deviling the sector, Cornerstone insurance gross premium income spiked by 55.08 percent to N5.56 billion in March 2021 from N3.58 billion as at March 2020.

Net premium income followed the same growth trajectory as it surged by 97.66 percent to N2.81 percent to N2.81 billion in March 2021 from N1.42 billion the previous year.

Historical Background

Cornerstone Insurance Plc. Incorporated on 26th July 1991 as a private limited liability company and became a Public Limited Liability, quoted on the Nigerian Stock Exchange in 1997. Our organization was established to conduct Insurance business in a professional, ethical and customer-focused manner and has remained committed to these values over the years.

 The Company is licensed and re-certified by the National Insurance Commission (NAICOM) to do both General and Life businesses and the classes of Insurance business we currently undertake include the following:

 Motor Vehicle, Aviation, Marine, Engineering All Risks, Asset Protection, Liability to Third Party, Oil & Gas, Group Life, Credit Life, Mortgage Protection, Term Assurance, Wealth Creation Products and Takaful (Islamic Insurance)

The company is committed to both our core values of Integrity, Empathy, Professionalism, Innovation, and Team Spirit and our continued mission of delivering value beyond expectations through needs-based products and quality service.

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