Leadway Assurance Limited, the largest insurer by revenue and total asset, continues to be well capitalised relative to risks taken, with most property solvency ratios stood at 710% at the end of 2022.
The ratio is well above the regulatory threshold of 100 percent as there is an ongoing shift towards more profitable products that are making an inroad into the Nigeria market and being accepted by customers.
In the insurance industry, the % Solvency ratio is an expression of efficient capital management. The indicator reflects the ability of an insurance company to meet its obligations to beneficiaries and policy holders.
Investment income that added impetus to profit contributed to the stability in solvency and stronger balance sheet as insurers benefitted from juicy yields in the era of central bank’s aggressive tightening.
Leadway Assurance realised N40.61 billion from income on financial securities as at December 2022, which is 49.97 percent to N27.12 billion as at December 2021.
The Nigeria 10 year government bond has a 14.450 percent yield, according to data from World Government Bonds (WGB).
The Central Bank of Nigeria raised its monetary policy rate to 18% from 17.5% in its February 2023 meeting, marking the second interest rate hike in 2023.
It is important to note that Leadway has a total shareholders’ fund of N81.91 billion as at December 2022, which is 1.91 percent higher than 2021’s N79.61 billion.
The insurer has been efficient in managing its asset and liability, which gives it the leeway in meeting claims payment. It continues to invest part of its premium in the equities and debt market to generate higher returns for shareholders.
“Asset and liability continues to be the foundation of investment philosophy at Leadway. The Group continues to face asset and liability challenges to fulfil its promises to customers and protect its balance sheet, and thus, we view this risk as primarily rising from mismatches between asset and liabilities and how this impacts income and capital,” said the company.
“The Group addresses these risks by ensuring protection of income and capital through managing interest rate risk exposures within the authorised level,” said the company.