Mutual Benefits Assurance Plc has recorded its first net loss after tax in four years as the insurer incurred significantly larger fair value on loss on financial assets despite an improvement in combined ratio.
However, investors should not fret because fair value gains/loss is not a recurring event (0ne off) and there is light at the end of the tunnel as the insurer is magnifying premium income while taming expense ratio amid a challenging environment.
For the year ended December 2021, Mutual Benefits posted a loss after tax of N4.30 billion from a profit of N5.10 billion as at December 2020.
The net loss was brought on by a net fair value loss on financial assets of N5.68 billion, which prevented top line impressive performance from translating to bottom line growth.
Some insurers have been reeling from the exceptional loss lurking in their books, and perhaps more worrisome is that those that recorded net loss after tax will not be paying dividend to shareholders.
There has been slight improvement in underwriting performance, thanks to excellent cost control mechanisms put in place by management and board of directors.
Combined ratio improved to 102.10 percent-albeit lower than the 100 percent benchmark- in December 2021 from 116.95 percent the previous year.
The insurer posted underwriting profit of N6.52 billion in December 2021 from N3.67 billion the previous year.
However, it incurred a real underwriting loss of N422.22 million as at December 2021.The real underwriting results is a better measure of underwriting performance because it takes into its calculation the management expense ratio.
Mutual Benefit honors obligation to policyholders as it paid N9.09 billion claims, which is 13.62 percent higher than 2020’s N8 billion.
It is worthy to note that it earns more in premium income than claims it pays out.
Claims ratio reduced to 43.07 percent in the period under review from 49.63 percent as at December 2020, according to MoneyCentral calculations.
Management expenses were up 10.39 percent to N6.48 billion in December 2021, lower than the 15.63 percent December inflation figure.
Additionally, management expenses ratio fell to 28.30 percent in December 2021 from 30.67 percent the previous year.
Mutual Benefits has been adapting quickly to the rapidly changing environment and the successful execution of several initiatives that was hastened by Covid-19 pandemic added impetus to the actualization of its five-year strategic plan.
Also, improved service delivery via digital channels underpinned revenues.
Gross premium written (GPW) increased by 48.55 percent to N29.41 billion as at December 2021, largely driven by growth in the Life and Non-Life segment, which validates the insurer’s innovative products and customer retention.
A breakdown of GPW shows premium from Non-Life was up 53.43 percent to N17.40 billion while premium from Life business increased by 39.16 percent to N12.01 billion.
Gross premium income (GPI) was up 27.54 percent to N24.77 billion as at December 2021 from N19.24 billion as at December 2020.
Mutual Benefits has continued to increase its recapitalization, which means it can underwrite bigger risk.
However, analysts say the insurer needs to invest more in the retail end of the market and take advantage of the country’s informal sector where many artisans and traders do not have cover.