International Energy Insurance (IEI) Plc is spending its way into the future as the technical insolvent insurer expends more money on operating expenses than the revenue it generates, a situation that calls for urgent cost reduction measures.
For instance, the insurer’s expense ratio stood at 118.93 percent in the first six months of 2022, albeit lower than 2021’s 114.80 percent, according to MoneyCentral calculations.
Put in another context, total operating expenses of N444.32 million is 1.18 times net premium income.
Unlike most insurers who are honoring mounting obligations and reeling from claims inflations, IEI’s claims ratio stood at 9.03 percent as it paid total claims of N33.73 million as at June 2022.
While the combined ratio improved to 127.96 percent from 148.45 percent as at June 2022, it is way above the 100 percent benchmark.
The insurer has been recording recurring operating losses as evidenced in negative shareholders’ funds of N11.86 billion that means it is technically insolvent.
As a result of significant material uncertainties, the auditors of the company have expressed doubt about the ability to continue to exist in the foreseeable future.
According to the auditors, the company no longer carries out oil and gas business that led to the decline in revenue and it has not resolved issues relating to its obligations in respect of the Daewoo loan it took over a decade ago.
It appears there is light at the end of the tunnel as IEI’s new owners Norrenberger Advisory Partners Limited (NAPL) are all bent on reviving the ailing insurer with enough capital injection and building its capacity so that it can take on more big-ticket transactions needed to magnify earnings. competitive.
“With the new investment with the new investors, we are ready. We are ready to underwrite all requests that come to the company. We are not yet there 100 per cent, but we have started the journey,” said Bukar Goni, International Energy Insurance Plc
“The public’s confidence is building. The retail aspect of the business of this company is doing well, particularly motor vehicle insurance, goods on transit. If you see the number of placements, people have come to this company; it is very wonderful and highly encouraging,” said Goni.