Underwriting firm Sovereign Trust Insurance Plc has reported Group net income of N518.90 million for the first half of 2021, supported by a significant improvement in all product lines even amid mounting obligations.
For six months through June 2021, the insurer’s net income improved by 15.68 percent year-on-year, while the reinsurer’s operating profit spiked by 55.025 percent to N670.55 million.
Gross written premiums (GWP) spiked by 30.34 percent to N7.85 billion in June from the prior year period to €14.5 billion, as net premium earned (NPE) jumped by 15.98 percent to N2.88 billion.
The insurer benefitted from the gradual reopening of the economy and the relaxation of lockdown measures by the government that paved the way for the underwriting of new business lines.
Of course, the coronavirus pandemic that has killed millions of people across the globe significantly disrupted business activities, and insurers were hard hit by the virus while a dovish tone by the central bank led to deteriorating yields of both short and long term government securities.
A low yield environment will elicit a reduction in investment returns, hence, putting future profit under pressures. However, rising bond yields since the start of the year could add impetus to investment income if the momentum is sustained to the last quarter of year.
Earlier in the year, Sovereign Trust Insurance said it had consistently maintained a confident A-rating with the international rating agency, Global Credit Rating, based in South Africa for over a decade.
In its solvency and operational report for financial institutions in Nigeria and other allied businesses released in December 2020, the agency affirmed that Sovereign Trust Insurance has great potential for growth in the years ahead considering some of the strategies that had been put in place to propel its operations.
Global Credit Rating noted that the company had shown consistency in its claims paying obligations to its customers spread all over the country.
The capital adequacy of the underwriting firm was considered strong according to the rating report, and this was underpinned by the sizable capital base catering for the quantum of insurance and market risks assumed.
The insurer’s efficient underwriting capacity indicates it has the capacity to undertake new policies and grow earnings that will enable it to magnify shareholders’ earnings.
Sovereign Trust Insurance shareholders’ fund was up 5.14 percent to N9.05 billion in June 2021 from N8.62 billion the previous year.
It paid total claims of N1.07 billion in June 2021, which is 9.03 percent higher than 2020’s N985.64 million the previous year. Loss ratio grew to 37.29 percent in the period under review as against 39.56 percent the previous year.
The company stated it had put in place a friendly-claim-process with the major aim of putting smiles on the faces of its various customers across the country, by ensuring that claims were settled within the shortest period possible on completion of all necessary documentation.
“Our commitment to uphold the tenets of our vision and mission has made the company one of the country’s most relevant and responsive insurance companies,” said Olaotan Soyinka, managing director/CEO of the company.