AXA Mansard Insurance Gets A Big Boost in Q1
AXA Mansard Insurance Plc broke free from the creeping speed in operating performance in 2019 and recorded a 120 per cent profit advance in the first quarter ended March 2020. At nearly N2 billion, the first-quarter profit isn’t that far from the closing profit of N2.9 billion the risk underwriting firm posted in all of last year’s trading.
The business turned out quite good for the company on both fronts of the core business of underwriting and investing during the quarter. The underwriting business saw a big leap in fortune from a 3 percent improvement in underwriting profit at the end of 2019 to a 30 per cent advance in the first quarter. Total investment income raised the mark further, speeding up from flat growth to over 81 percent upsurge over the same period.
The developments have largely addressed the concerns last year that centred on the constraints on both angles of underwriting business and earnings from the investment. The indications are that the underlying operational issues are being addressed.
The company’s strength in the year is the elevated performance on the side of revenue. Costs are neither moderating nor are they encroaching on revenue. Management is, therefore, able to convert the increases in income lines into profit.
Adjustments in claims and underwriting expenses smoothened increases and declines here and there – which left the margin of underwriting cost to underwriting income unchanged at 76 percent. That enabled management to convert a good part of the increase in net underwriting income into underwriting profit.
AXA Mansard Insurance provides life and general business risk management solutions and other financial services. It closed the 2019 operations with a share capital of N5.25 billion while it needs to meet the specified benchmark capitalization of N18 billion by the end of December 2020.
The company operates through four subsidiaries that make up AXA Mansard Group. Its services cover insurance, asset management, health insurance, property development, and pension fund administration and management. Last February, it resolved to divest from AXA Mansard Pensions Limited and Real Estate Investment.
The first quarter operations of AXA Mansard Insurance to March 2020 show a net premium income of N8.21 billion. This represents a year-on-year growth of 37.8 percent, improving from an increase of 33 percent recorded at the end of 2019. Fee and commission income dropped by over 21 percent to N572 million but net underwriting income still grew by 31 percent to N8.8 billion at the end of the first quarter.
There was a major increase in gross claims expenses during the review period but it was largely countered by changes in claims expenses recovered from the reinsurers. Similar changes in underwriting expenses limited growth in net underwriting expenses to less than 32 percent to N6.7 billion.
Net underwriting income and expenses, therefore, grew virtually at par in the first quarter. This means there was neither cost-saving from underwriting costs nor an encroachment of the costs on net underwriting income.
This development represents a big improvement this year for the company from the closing position in 2019. Net underwriting expenses had grown well ahead of net underwriting income last year at 42 percent compared to 31 percent. That resulted in a marginal improvement of 3 percent in operating profit in the year.
This year so far the company has been able to convert the increase in net underwriting income into underwriting profit. At over N2 billion at the end of the first quarter, underwriting profit grew by 30 percent year-on-year – one of the best performance records for the company in recent years.
A total investment income of N2.4 billion at the end of March 2020 looks very much like a windfall for the company. It is a year-on-year growth of roughly 82 percent – a big rebound from flat growth in 2019 and a decline in 2018. The big boost came from net gains on financial instruments – which surged upwards from only N155 million in the same period last year to over N1 billion at the end of March this year.
Management expenses were kept largely under control during the first quarter, which ensured a moderated growth during the period. This is confirmed by an advance of 111 percent in operating profit to N2.4 billion at the end of the first quarter.
The company closed the period with an after-tax profit of N1.96 billion, a clear 120 percent leap over the closing figure in the same period in 2019. The company had closed the 2019 financial year with an after-tax profit of N2.9 billion.
AXA Mansard Insurance earned 15 kobo per share at the end of the first quarter, rising from 8 kobo per share in the same period in the preceding year.
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