IEI’s Protracted Loss Position Worsens Underwriting Income

International Energy Insurance (IEI) Plc deteriorating underwriting income indicates the beleaguered insurer pays out more in claims than premium it receives, which validates recurring net losses, but there is light at the end of the tunnel as a new investor is willing to inject the needed capital into the business.

For instance, underwriting profit dipped by 96.97 percent to N3.39 million in December 2023 from N131.27 million as at December 2022.

Large drops in underwriting income can indicate that the underlying insurance policies are under-priced in the market or that the insurance companies are writing riskier policies, resulting in losses.

Combined ratio deteriorated to 217.81 percent in the period under review from 191.31 billion the previous year.

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. Even if the combined ratio is above 100 percent, a company can potentially still be profitable because the ratio does not include investment income.

Drilling down the numbers shows the insurer has spent more on management expenses than the revenue it generates.

For instance, the total expense ratio stood at 148.53 percent in December 2023,  from 139.51 percent the previous year.

The company posted a loss after tax of N154.74 million, from a loss position of N722.57 million the previous year.

Accumulated losses have hit N24.75 billion as at December 2023 while negative shareholders’ funds stood at N12.12 billion.

The company plans to expand its retail and corporate businesses, and rebuild its capacity in the oil and gas sector, a strategy needed to magnify revenue and cash flow.

It is noteworthy that the insurer would expand its alternative channels to attract the retail market including the small and medium enterprises, educational institutions, religious societies and market women associations among others.

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