Leadway Assurance Company Limited, the largest insurer by total asset in Africa’s most populous nation, has reported a rise in premium written (GPW) for the year ended December 2021 to N70.62 billion, as rising bond yields bolstered underwriting results.
Leadway Assurance’s premium written increased, year-on-year, by 31.14 percent from the N53.85 billion reported in FY-2020, driven by growth in all segments.
In life business, GPW was up 18.10 percent to N36.43 billion as at December 2020, while the non-life segment spiked by 47.90 percent to N34.18 billion.
The insurer notes that it continues to see strong market conditions and improvement in macro-economy, and it is optimistic that its innovative market penetrating products will continue to meet customers’ needs.
Underwriting income was up 27.75 percent to N50.65 billion as at December 2021, thanks to improvement in the annuity market as a result of the lifting of lock down and general improvement in the economy after covid-19 pandemic.
Additionally, the uptick in underwriting income can be attributed to the improvement in non-specialty business arising from the change in attitude of people regarding insurance after the end Sars protest.
Leadway Assurance delivered positive underwriting results that were bolstered by rise in yield on bond securities over the year which resulted in a decrease in liabilities of its life business by N79.6 billion, specifically, in the annuity portfolio.
It posted an underwriting profit of N71.64 billion in December 2021 from a loss of N103.53 billion as at December 2020.
Financial institutions have been benefitting from the gradual increases in bond yields emblematic in a benign yield environment.
When yields are rising insurers make money by packing policyholders in insecurities to earn sizable income that helps compensate for deteriorating underwriting conditions brought on mounting claims.
The 12-month treasury yield which hovered between 1 percent and 3 percent between the last quarter of 2020 and first quarter of 2021 (pre and post pandemic period) now stands at 4.90 percent.
Also, Nigeria’s 10-year yield stood at 12.0 percent on Friday, May 20, according to over-the-counter interbank yield quotes for this government bond maturity.
And that compares with 8 percent in the first quarter of 2021 and 4.18 percent in the last quarter of 2020, according to data from Statista.
Interestingly, Leadway Assurance’s combined ratio of 96 percent is below the 100 percent threshold, which means it is not paying out more money in claims than it is receiving in premiums.
Higher demand and investment returns, expansion in the credit quality of fixed income securities and reduced mortality rates due to roll out of vaccine, has added impetus to the earnings, reserves, and profitability of the composite insurer.
Pretax profit was up 4.73 percent to N11.95 billion in December 2021 from N11.41 billion the previous year.
The single digit growth at the bottom line (profit) was due to N83.68 billion fair value loss on assets at fair value.
The profits of the largest insurers were hard hit by fair value loss on assets as a lot of them had to book losses due to rising bond yields, and the good tiding is that such items are one off and do not occur at all times.
Leadway has maintained another year-on-year increase with N48 billion claims settlement, sustaining its five-year streak of outpacing the industry players in claims expense to policyholders.
Claims expenses were up 10 percent to N48 billion in 2021 from N43.50 billion as at December 2020.
“At the turn of the new decade last year, we reaffirmed our mission and mandate to deliver superior insurance services to individuals and corporations alike. That commitment has propelled us to maintain a year-on-year increase in our claims to our policyholders,” said Tunde Hassan-Odukale, Managing Director/Chief Executive Officer, Leadway Assurance.
“This year, we paid the highest amount ever in the annals of the company and perhaps the largest in the insurance industry in 2021. Despite the prevailing economic realities and other adverse economic indices, we heralded this leadership position last year with an equally superior industry-leading payout,’’ said Odukale.