Consolidated Hallmark Insurance: Going Strong For The Second Year
Consolidated Hallmark Insurance Plc is going strong for the second financial year after closing 2019 with new strength in profit performance. The company’s management is keeping earnings momentum elevated from an impressive height of over 47 percent profit advance last year. With that, the risk underwriting firm attained full recovery from a 64 percent profit drop in 2016 and established a new profit peak in the year.
The upturn in earnings performance seen last year was maintained in the first quarter ended in March 2020. There was a healthy growth all the way from top to the bottom lines, closing the period with an after-tax profit of over N209 million.
Mr. Eddie A. Efekoha, the company’s managing director/CEO made good his promise to deliver elevated earnings numbers to meet stakeholders’ expectations in 2019. His strategy for the year was to unlock new revenue streams and reduce operating costs. The results show that it has worked.
He is again looking ahead with a new zeal and greater momentum to attain greater heights for the current financial year. The strategy remains the enhancement of income lines and moderation of costs – which delivered the outstanding profit growth in 2019.
The company is able to deliver an increasing profit per naira of premium income earned. It continues to record gains at various revenue levels as well as improvements in margins at virtually every point of cost-income measurement.
The company’s management has succeeded in shaping up operations as it targets fresh capital injection needed to meet the new minimum capital requirement for the insurance sector. Consolidated Hallmark Insurance needs an additional share capital of N6 billion to top up its N4 billion paid-up capital to secure the N10 billion benchmark for the general insurance business.
The insurance company closed the first quarter operations in March 2020 with earnings growth for the third straight year. Gross premium income grew by 18.7 percent year-on-year to N2.8 billion at the end of March.
This is further upon an increase of close to 28 percent in gross premium revenue at the end of 2019. Net premium income grew by 13.5 percent at the end of the first quarter to over N1.8 billion. This is a continuing growth from an increase of 15.7 percent in the 2019 full year.
Net underwriting income improved by 10.5 percent to N1.9 billion at the end of the first quarter. It had grown by 18 percent to N5.5 billion at the end of last year.
The company’s cost reduction drive is working for the second year in respect of claims expenses. Net claims expenses dropped by 27 percent in the first quarter to N504 million after a drop of 6.7 percent at the end of last year.
Underwriting expenses rose by 12 percent to over N607 million but total underwriting expenses still declined marginally at 2 percent to N1.1 billion at the end of the first quarter. This is a further cost-saving success compared to an increase of 6 percent of the total underwriting costs in 2019.
The summary of the movements in underwriting cost and income indicates significant cost savings for the company in the first quarter. Net underwriting income grew 10.5 percent while total underwriting expenses declined by 2 percent during the review period. The result is a further acceleration from an already outstanding growth in underwriting profit.
Underwriting profit rose by 63 percent year-on-year to N789 million at the end of the first quarter. It had grown by 51 percent to N1.8 billion at the end of 2019. The company, therefore, converted a significantly increased proportion of net underwriting income into underwriting profit at 41.5 percent at the end of the first quarter compared to 28 percent in the same period last year.
The only weakness in revenue performance came from investment income, which dropped by over 20 percent to N224 million. Some cost increases claimed a good part of the gain in underwriting profit. These include an increase of 30 percent in management expenses to N694 million, a major increase in net fair value loss on financial assets, and a shift from net impairment write back to a net charge over the period.
The result of the cost-income relationship at the end of the first quarter of the year is that the company maintained an elevated position with income lines generally improved while costs again moderated.
Consolidated Hallmark Insurance maintained the enhanced profit capacity it gained last year. It grew after-tax profit by roughly 5 percent year-on-year to over N209 million at the end of March 2020 – more than one-third of its closing profit in 2019.
The company earned over 2 kobo per share in the first quarter, slightly improved on a year-on-year basis. It earned 7 kobo per share at the end of 2019.
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