25.2 C
Monday, January 30, 2023

Mutual Benefit, NEM, AIICO, Regency, Have Highest Insurance ROE

Must read

Listen now
- Advertisement -
- Advertisement -

The management of Mutual Benefit Assurance Plc, NEM Insurance Plc, and AIICO Insurance Plc are pulling the right levers to improve efficiency as they have the highest return on equity (ROE) in the insurance industry.

This means that these four firms who have surmounted the unfavorable underwriting environment have delivered a higher profit to their shareholders more than peer rivals.

For instance, Mutual Benefit Assurance has recorded an average return on equity (ROE) of 23.96 percent as at September 2022 as it returned to the path of profitability, maintaining an efficient underwriting performance.

NEM Insurance has an ROAE of 21.70 percent, AIICO Insurance Plc, 20.08 percent; and Regency 15.39 percent.

It is important to note that the “big four” have a low combined ratio compared to industry standard as they generate more in premium income than the claims they pay out to policyholders.

A reduction in fair value loss on financial assets and strong growth in revenue on the back of the improved economic activities helped insurance companies record profit growth that paves the way for them to pay dividends to shareholders.

The combined net income or profit after tax (PAT) of sector players spiked by 306.23 percent to N20.15 billion in September 2022, the fastest profit growth in more than a decade, according to data gathered by MoneyCentral.

However, the surge in profit and improvement in ROE have not added impetus to the stock valuations of companies as the insurance sector is the worst performer on the NGXASI.

The NGX-ASI insurance sector index has shed -21.86 percent since the start of the year, underperforming the NGXASI index gains of 4.16 percent.

The weak sentiment is on top of a broader selloff in stocks at the equity market as investors are wary about a possible looming political instability immediately preceding next year’s elections and macroeconomic uncertainties.

- Advertisement -
- Advertisement -

More articles


Please enter your comment!
Please enter your name here

This site uses Akismet to reduce spam. Learn how your comment data is processed.

- Advertisement -

Latest article