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Mutual Benefit Profit Jumps as Underwriting Capacity Improves Amid COVID-19 Shocks

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Mutual Benefit Assurance Plc recorded a jump in profit while efficient underwriting capacity led to an improvement in combined ratio even amid the rout caused by the coronavirus pandemic.

For the six months through June 2020, the insurer’s net income increased by 9.68 percent to N1.56 billion from N1.42 billion as June 2019.

The growth at the bottom line was largely driven by a double growth in premium income, as the company’s life business continues to buoy earnings.

Also, the stellar performance shows the composite insurer’s innovative products are making an inroad into the Nigerian market.

Gross premium income (GPI) was up 14.75 percent to N9.41 billion in the period under review as against N1.21 billion as at June 2019. Net premium income increased by 13.61 percent to N7.87 billion as at June 2020 fromN6.92 billion the previous year.

Mutual Benefit Assurance is efficient as it earns more in revenue more than it is pays out in claims despite the tough and unpredictable macroeconomic environment.

Loss ratio fell to 36.36 percent in June 2020 as against 37.49 percent the previous year, based on Money Central Calculations. Claims expenses were up 10.21 (lower than the 12.47 percent inflation figure) to N2.86 billion in the period under review.

Despite high cost of doing business that is stunting the growth of companies across sectors, Mutual Benefit Assurance saw management expenses reduce by 6.78 percent to N2.46 billion in the period under review from N2.64 billion as at June 2019.

Operating expense ratio fell to 31.37 percent in June 2020 from 38.24 percent the previous year; this means the composite insurer has spend less on expenses in generating premium income.

Combined ratio improved to 98.12 percent in the period under review-which is lower than the 100 percent generally acceptable benchmark- from 101.45 percent the previous year.

The insurer’s investment income dipped by 11.23 percent to N1.13 percent to N1.27 billion the previous year.

Investment returns for insurers in Africa’s economy has been deteriorating since the start of the year when the central bank banned non-bank customers such as insurance companies and pension funds late last year.

Yields on short term government securities has fallen to around 2 percent, lower than the 12 percent inflation figure.

The management of Mutual Benefit Assurance has employed better strategies of risk profiling of businesses within its portfolio to reduce its reinsurance costs.

Total Asset increased by 7.0 percent to N72.54 billion in June 2020 from N67.77 billion the previous year.

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