NEM Insurance Plc has recorded strong underwriting results in a complex environment as the insurer has a solid capital base to absorb macroeconomic shocks.
Overall, NEM posted underwriting profit of N3.69 billion in June 2022, which is 15.13 percent higher than 2021’s N3.20 billion.
Combined ratio stood at 93.25 percent in June 2022, but lower than 2021’s 91.14 percent, according to MoneyCentral calculations.
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.
The insurer has a positive real underwriting result of N8.77 billion in the period under review from N6.17 billion as at June 2022.
It must be noted that NEM is the most efficient insurer in Nigeria as its combined ratio has been below the threshold over the past decade even amid inflationary pressures, rising diesel prices, and currency volatility.
There has also been a sharp reduction in expense ratio, which means the insurer has been spending less on obtaining new policies from insurance carriers.
Expense ratio fell to 58.22 percent in the period under review from 55.62 percent the previous year.
NEM Insurance saw gross premium income (GPI) increase by 20.39 percent in June 2022 from N15.23 billion the previous year.
Net premium income (NPI) rose by 12.63 percent in the period under review from N10.92 billion the previous year.
Net profit after tax increased by 25.87 percent to N2.53 billion in June 2022 from N2.01 billion the previous year.
The insurer paid N4.31 billion in claims, which is 11.08 percent higher than 2021’s N3.88 billion.
Claims ratio reduced to 35.03 percent in June 2022 from 35.53 percent the previous year.