Nem Insurance’s Profit Rises Amid Unfavorable Underwriting Environment

NEM Insurance Plc is the only insurer that has been recording consistent profit growth at the top and bottom (sales) lines while the combined ratio is below the threshold even amid an unfavorable underwriting environment.

The company’s net profit rose 31.64 percent to N5.20 billion as at September 2023, from N3.95 billion as at September 2022.

While the combined ratio moved to 94.05 percent from 88.78 percent the previous year, it is below the benchmark.

Underwriting profit spiked by 22.75 percent to N7.39 billion as at September 2023, which underscores the insurer’s excellent underwriting performance amid claims inflation environment.

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.

NEM insurance paid total claims of N5.82 billion to policyholders in the third quarter, which is 20.24 percent higher than 2022’s N4.84 billion. Claims ratio rose to 24.17 percent from 29.03 percent the previous year.

The company has an efficient pricing policy which helped compensate for rising inflation as evidenced in an uplift in revenue.

Gross premium written (GPW) was up 86.79 percent to N53.63 billion in September 2023 from N28.711 billion the previous year.

Gross profit income (GPI) increased by 49.48 percent to N37.91 billion in the period under review from N25.36 billion the previous year.

Net premium income followed the same growth trajectory as it was up 44.33 percent to N24.04 billion as at September 2023 from N16.69 billion the previous year.

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