Prestige Assurance Plc net income for the second-quarter of 2021 spiked by 25.13 percent as obligations to policyholders continues to mount.
The insurer’s net income swelled to N776.50 million in June 2021 from N620.34 million the previous year.
Despite the challenging conditions in the insurance industry and the coronavirus crisis, the company was able to underwrite healthy business volumes.
Its net premiums written (NPW) jumped by 34.82 percent to N2.58 billion in the period under review from N1.91 billion the previous year.
However, the insurer is grappling with mounting obligations to policyholders that have balloon the combined ratio.
Claims expenses surged by 100.78 percent to N1.10 billion in June 2021 from N548.94 billion the previous year. Loss ratio moved to 42.66 percent in June 2021 from 28.64 percent the previous.
The insurers’ combined ratio — a measure of claims and costs as a proportion of premium income — has worsened to 102.14 percent in June 2021 from 93.94 percent the previous year. Anything over 100 per cent suggests that the industry will be lossmaking.
The industry is struggling with deteriorating underwriting performance that threatens profit growth, and the incessant devaluation of the currency and inflation pressures could impact negatively on claims as cost of replacement of assets are expected to go up.
In a bid to meet up regulatory requirements and enhance its operations, Prestige Assurance has embarked on capital raising.
In July 2020, it planned to raise N6.82 billion through the issue of 13,635,796,006 shares at N.50 kobo per share.
The boards of directors are optimistic that the rights issue will be oversubscribed because investors have confidence in the company’s growth prospects.
“The proposed rights issue is part of the company’s recapitalisation strategy, which in turn is part of response to the regulatory directive from the National Insurance Commission and path towards the implementation of the company’s medium-term strategy,” said Doyin Salami, chairman of the company.