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Wednesday, March 22, 2023

Universal Insurance Expense Ratio Improves as Solvency Margins hit 160%

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Universal Insurance Plc is using its resources to drive top-line growth and it has the ability to pay out claims when unforeseen events occur as solvency ratio remains manageably strong.

The insurer is not spending its way into the future, surmounting the unfavorable underwriting conditions.

While the combined ratio (CR) increased to 93.02 percent in June 2021 from 79.67 percent as of June 2020, the ratio is however below the 100 percent threshold. The CR hit an all-time high of 198.87 percent in 2017, a period the firm was struggling with huge management expenses.

An improvement in CR validates Universal Insurance’s underwriting capacity, even amid the coronavirus pandemic that disrupted the economy and a low yield environment.

Total operating expense ratio (underwriting plus management expenses) reduced to 79.79 percent in June 2021 from 83.08 percent the previous year.

Claims ratio reduced to 13.23 percent in June 2021 from 69.98 percent recorded in the corresponding period of 2017.

The combined ratio is a measure of profitability used by an insurance company to gauge how well it is performing in its daily operations.

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.

Universal Insurance posted underwriting profit of N971.97 million in June 2021, which is 67.41 percent higher than 2020’s N580.33 million.

It posted positive real underwriting results of N100.98 million, according to MoneyCentral Calculations.

The company was presently meeting all its obligations especially, in the area of prompt claims settlement to clients and other stakeholders.

“We have a competitive edge in claims settlement through investment in state-of-the-art communication and information technology thereby enhancing our operational efficiency and offer to pay off legitimate claims in a jiffy after the execution of discharge voucher,” said Ben Ujoatuonu managing director, Universal Insurance.

It incurred N1.20 billion in total operating expenses in the period under review, which is 18.30 percent higher than 2020’s N1.02 billion.

The insurer’s innovative products are contributing to top-line growth as gross premium income increased by 12.09 percent to N1.66 billion in June 2021 from N1.48 billion as at June 2020.

Net premium income followed the same growth trajectory as it was up 17 percent to N1.43 billion as at June 2o21.

To ensure the safety of motorcycle riders and their passengers in Nigeria, Universal Insurance introduced an insurance product, called’ Okada Personal Assurance & Safety Scheme’.

The plan was uniquely designed to provide cover for personal accidents to the insured rider. Also, the product would also be sold as an individual policy and as a group scheme to okada riders.

Notably, Universal Insurance can meet payment of possible insurance claims and other losses as its total admissible total assets exceeds total admissible liabilities.

Its Solvency margin ratio stood at 160 percent as at June 2021, according to MoneyCentral calculations.

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