|
Listen now
|
Prestige Assurance Plc has succumbed to macro-economic volatility as earnings slumped, however, the insurer was able to maintain a disciplined underwriting as the combined ratio remained below the threshold.
The half-year financial results of the company showed net income or profit after tax (PAT) reduced by 19.47 percent to N559.82 million from N814.46 million as at June 2022.
Gross premium written (GPW) was down 2.18 percent to N8.05 billion from N8.05 billion the previous year.
Net premium Income for Prestige Assurance grew a mere 1.45 percent to N2.79 billion as the company remains committed to delivering superior returns to its shareholders while providing risk protections and wealth preservation services for its customers.
The macroeconomic environment has been scorching, aggravated by the cash crunch, while the removal of subsidy on premium motor spirit (PMS) stoked unprecedented weakening of the Naira and added more fire to inflationary pressure.
Nigeria’s inflation rate rose to 22.79 percent in the month of June 2023, representing a 0.38 percent point increase from 22.41 percent recorded in the previous month, this is contained in the recently released consumer price index report by the National Bureau of Statistics (NBS).
The unification of the exchange rate resulted in a 63 percent slump in the value of the Naira.
These poor indicators add to the low insurance penetration compared to peers in Sub-Saharan Africa (SSA).
According to Swiss Re, the Nigerian insurance sector ranks 63rd globally (out of 88 countries profiled) in terms of gross premium income and the sector contributed about 0.03 percent to global premiums in 2019.
But analysts at Afrinvest Securities in a note to clients say weak insurance penetration is a blessing in disguise as it presents an attractive investment case, especially given the country’s large population of 200 million people.
“Insurance penetration and density remain poor in Nigeria, presenting an attractive young and growing middle class,” said analysts at Afrinvest Securities.
It is worth noting that Prestige Assurance navigated some of these challenges as its combined ratio of 81.25 percent as at June 2023 is below the 100 percent benchmark.