The introduction of innovative products and income from investment in fixed income securities have added impetus to the earnings of Linkage Assurance Plc even as the company is reeling from spiraling combined ratio.
For the first nine months through September 2020, Linkage Assurance’s net income spiked by 89.51 percent to N1.12 billion from N591.9 million the previous year.
Gross premium income was up 28.60 percent to N6.88 billion.
The company said it took advantage of developments in the economy by developing strategic initiatives such as deployment of an online portal for selling of motor insurance, as well as repositioning its bouquet of retail products like the Third Party Plus.
The insurer focused on continuous growth in customer, productive sales in the market and impeccable underwriting and risk management practices that sets it apart from peer rivals.
Linkage Assurance deployed the funds at its disposal to the financial market, and the strategy yielded fruit. Investment income from investment securities such as bonds and equities rose by 43.57 percent to N2.57 billion from N1.79 billion.
However, Linkage Assurance is struggling with deteriorating combined ratios as management and underwriting expenses ballooned in the period under review.
That calls for urgent cost reduction because future investment income will be pressured, no thanks to the COVID-19 crisis and stringent central bank policies have led to a sharp drop in yield in short term government securities.
Combined ratio stood increased to 155 percent in the period under review from 153 percent 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.
As a result of deteriorating combined ratio, Linkage Assurance recorded negative real underwriting results of N1.66 billion as at September 2020.