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Thursday, September 28, 2023

Coronation Insurance Posts First Loss in a Decade

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Coronation Insurance Plc has posted its net loss in more than decade as it continues to spend more on operating expenses to generate premium income.

For the first three months through March 2023, Coronation Insurance posted a loss after tax of N992.43 million from a profit of N810.14 million as at March 2022.

The company has been reeling deteriorating profit brought on by rising total operating expenses (underwriting plus management expenses) whose growth exceeds increases in premium income.

Of course, insurers in Africa’s largest economy are spending their way into the future as they capitulate to a tough and unpredictable operating environment as red-hot inflation means workers’ wages have to be increased.

Also, these firms spend a lot of money on diesel to power their generator plants as electricity from the national grid is unreliable.

Coronation insurance’s total expenses (management expenses plus underwriting expenses) is 0.91 times net premium income, according to MoneyCentral calculations. ‘

In short, total expense ratio increased to 91.32 percent in March 2023 from 70.82 percent as at March 2022.

It paid N650.18 million in claims to policyholders, which is 10.68 percent higher than 2022’s N587.42 million the previous year.

The combined ratio deteriorated to 114.47 percent as at March 2023 from 87.96 percent as at March 2022.

The combined ratio is a measure of profitability used by an insurance company to gauge how well it is performing in its daily operations. The combined ratio is typically expressed as a percentage.

A ratio below 100 percent indicates that the company is making an underwriting profit, while a ratio above 100 percent means that it is paying out more money in claims that it is receiving from premiums.

Despite the prevailing conditions in the economy that may have impacted sign-on of new business, renewal rate, installment payment of premium, Coronation Insurance’s gross premium written by 12.10 percent to N8.52 billion as at March 2023.

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