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Thursday, August 18, 2022

Coronation Insurance Posts N1.24 bn Profit, Uses Capacity to Underwrite More Policies

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Despite a challengingly difficult environment, Coronation Insurance Plc has posted N1.24 billion underwriting profit as the insurer continues to use its capacity to underwrite more policies.

Premium to surplus ratio stood at 44.80 percent in December 2021 from 37.92 percent as at June 2020, according to MoneyCentral calculations.

Premium to surplus ratio is net premiums written divided by policyholder surplus. Policyholder surplus is the difference between an insurance company’s assets and its liabilities. The premium to surplus ratio is used to measure the capacity of an insurance company to underwrite new policies.

Premiums are the lifeblood of an insurance company. The more premiums are paid, the more sustainable an insurance company is. However, premiums aren’t automatically considered income on a balance sheet.

A low premium to surplus ratio is considered a sign of financial strength because the insurer is theoretically using its capacity to write more policies.

Coronation Insurance has paid N5.13 billion in claim to policyholder, which is 59.68 percent higher than 2o20’s N3.20 billion.

Insurer’s in Africa’s largest economy have seen claims mounting on the back of inflationary pressures and currency volatility as the cost of replacing assets have gone up, which means they might hike premium rates to survive the unfavorable underwriting environment.

Nigeria’s inflation rate in the month of June 2022, surged further to 18.6% compared to 17.71% recorded in the previous month. This is according to the recently released CPI report for the month of June 2022, by the National Bureau of Statistics (NBS).

Coronation Insurance has strong capital buffers to withstand headwinds, and with a solvency ratio above the regulatory threshold validates, little wonder it met the minimum capital requirement set by the regulator.

It has a shareholders’ fund of N21.58 billion as at December 2021, and its total assets stood at N39.80 billion.

Of course, the insurer has an excellent asset allocation strategy, taking advantage of the gradual improvement in the yield environment as investment income was up 62.68 percent to N1.50 billion as at December 2021.

Its Ghana subsidiary Coronation Insurance Ghana Limited raised its capital to meet the new minimum capital requirement.

The Company enhanced its underwriting capability through a capital injection of about $5.14 million by its shareholders.

This has significantly raised the company’s minimum capital from ¢17.1 million to over ¢52 million, putting it among the top insurance companies in Ghana in terms of solvency and capital.

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