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Mutual Benefit’s Underwriting Profit Surges 106.74% Despite Net Loss

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Mutual Benefit Assurance Plc has reported improved underwriting income during the second quarter of 2021, despite a net loss caused by fair value loss on assets.

Underwriting profit surged by 106.74 percent to N5.52 billion in June 2021 from N2.67 billion as at June 2020.

The improvement in underwriting capacity was largely attributed to contribution of the products and reduction in claims and expense ratio.

Gross premium income was up 43.64 percent in the period under review from N9.41 billion the previous year.

Net premium income rose by 52.09 percent to N11.97 billion in the period under review from N7.87 billion the previous year.

Gross premium written surged by 50.98 percent to N5.72 billion in the period under review from N4.90 billion the previous year.

The gross premium written growth was bolstered by a 16.77 percent uptick in life (Group life and individual life) to N5.72 billion as at June 2021.

Despite improvement in Life business, analysts are of the view that lack of understanding of the benefits of life insurance remain the most important obstacles facing insurers.

Of course, only the macrocosm of a population is financially buoyant to take insurance cover in a country where over 50 percent of a population of 200 million live on less than $1.98 a day.

Affordability and poor regulations are hindering players in the industry from competing with peers in Sub Sharan Africa, but the regulator has insisted that insurers shore up their capital, a scheme that is seen as spurring mergers and acquisition as most companies are teetering to the brink of collapse.

The insurers’ combined ratio improved to 80.01 percent in June 2021 from 121.87 percent the previous year.

That is due to a reduction in claims expense ratio to 30.15 percent in the period under review from 36.34 percent the previous year. Expense ratio dipped to 23.05 percent in June 2021 from 54.47 percent the previous year.

The combined ratio is typically expressed as a percentage. 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.

A cursory look at the books of Mutual Benefit Assurance shows the insurer posted a net loss of N1.98 billion, that compares with a profit of N1.56 billion recorded the corresponding period of 2020.

The loss was elicited by fair value loss on financial assets to a tune of 5.51 billion, but there is light at the tunnel as this is a one-off transaction. These are surmountable challenges.

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