A deceleration in claims expenses has spurred Prestige Assurance to growth as underwriting profit surged 134.70 percent, but there are indications the COVID-19 crisis will result in mounting obligations in the last quarter of 2020.
For the first six months through June 2020, Prestige Assurance’s underwriting profit increased to N789.83 million from N336.83 million as at June 2019.
The efficient underwriting capacity was largely drive by a 44.01 percent reduction in claims expenses to N548.94 million from N980.55 million the previous year.
Loss ratio improved to 28.65 percent in the period under review as against 54.98 percent the previous year, which means the insurer is earning more in premium income than it is paying out in claims.
However, the coronavirus pandemic that ravaged economies across the globe could lead to spiraling claims expenses in the third and fourth quarters as events were cancelled while houses were burgled.
Analysts at Pricewatercoopers in a recent report said the fallout from the COVID-19 outbreak includes a surge in health, travel and business interruption claims, pressure on sales from reduced business activity, and less use of face-to-face channels.
“This raises the possibility of regulators asking for extraordinary solvency tests to ensure insurers can withstand the immediate and knock-on impacts,” said the analysts.
Despite the challenging conditions in the insurance industry in 2020, Prestige Assurance was able to underwrite healthy business volumes.
Net premium income was up 7.46 percent to N1.91 billion as at June 2020 as against N1.78 billion as at June 2019.
The strong underwriting result along with income from investments led to a 79.25 percent increase in net income to N620.35 million as at June 2020 from N346.06 million the previous year.
Prestige Assurance said that it was looking for more effective ways to diversify its portfolio mix that would eventually protect the quality of its business.
In a bid to meet up regulatory requirements and enhance its business operation and reach, the insurer is set to raise N6.82 billion through the issue of 13,635,796,006 shares at N.50 kobo per share.
“For us at Prestige, these resources would provide us with capital to do a number of things within the business. Firstly, we have to ensure that our clients continue to enjoy global standard service,” said Doyin Salami, Chairman Prestige Assurance.
“We must develop products that are in tune with the aspirations of Nigeria, especially in changing environment in which our clients face,” said Salami.