Lasaco Assurance Plc topped up its foreign exchange revaluation windfall that enabled it to keep profit from dropping since the second quarter. A further revaluation gain of N279 million flowed in, in the third quarter, topping up the half year figure of N579 million to N878 million at the end of September 2020. This is an exceptional growth from only N92 million in the same period in 2019.
As happened in the second quarter, the inflow provided the healing balm for a 60 percent plunge in underwriting profit quarter-on-quarter to N263 million in the third quarter. It provided the strength that kept profit from disappearing in the third quarter.
The revaluation gain was the singular development that accounted for a top record growth of 91 percent in after tax profit quarter-on-quarter to N234 million in the third quarter. It remains the quickening force for profit performance for the company at the end of the third quarter.
The company’s year-on-year position at the end of the third quarter operations shows that adverse pressures persisted on both sides of its underwriting business and investment earnings. Increase in unearned premium grew further in the third quarter from 54 percent at half year to 167 percent to N2.4 billion at the end of the third quarter. That limited the growth of gross premium income over the nine months of the year.
At N7.7 billion, gross premium earned reversed from a 13 percent drop year-on-year at the end of June to a 5 percent improvement at the end of the third quarter. A drop in reinsurance expenses was sustained in the third quarter, which powered a growth of 19 percent in net premium income year-on-year to N4.8 billion at the end of September 2020.
Despite a drop of 16 percent in fees and commissions, net underwriting income reversed from a drop of 12 percent at half year to register an increase of 13 percent to N5.5 billion at the end of the third quarter.
Pressure from claims and underwriting expenses intensified in the third quarter. Net claims paid multiplied four times quarter-on-quarter in the third quarter to N1.4 billion. That accounted for 68 per cent of the closing net claims expenses of over N2 billion at the end of the period.
The high growth in net claims in the third quarter reversed an 18 percent drop at half year to an upsurge of 80 percent year-on-year at the end of September. Similarly, underwriting expenses tripled quarter-on-quarter in the third quarter and drove a growth of 22.5 percent year-on-year to over N2 billion at the end of the third quarter. That is a sudden change of direction from a slight decline of 1.5 percent in underwriting expenses at half-year.
Total underwriting expenses changed direction from a decrease of 7 per cent at half year to a jump of 45.7 percent year-on-year at the end of September 2020. The strain in the underwriting business at the end of the period is that total underwriting cost grew three and half times ahead of net underwriting income at 45.7 percent compared to 13 percent.
The result is a wider drop in underwriting profit at 33 percent year-on-year to N1.3 billion at the end of the third quarter than the 20 percent recorded at half year. This reflects a further sharp drop in underwriting profit in the third quarter at 60 percent quarter-on-quarter.
Investment income was slightly up in the third quarter but the nine-month position still dropped by 8 per cent to N505 million over the review period.
The company maintained the upturn in other income that is driven by the foreign exchange revaluation gain. Other income multiplied nine times year-on-year to about N993 million at the end of the third quarter. Foreign exchange revaluation gain accounted for N858 million or over 86 percent of the figure.
The foreign exchange gain enabled the company to absorb its operating expenses of N1.7 billion at the end of the third quarter and still pushed up profit. It made the difference between the drops in underwriting profit and investment earnings and an improvement of about 20 percent in pre-tax profit to over N1 billion at the end of September 2020.
Lasaco Assurance closed the third quarter operations with an after tax profit of N862.5 million, which is a year-on-year increase of 32 percent. This is a strong acceleration from 5.6 percent profit improvement at half year.
The nine-month profit figure compares to the company’s full year profit of N315.7 million in 2019. The company’s forecast for the final quarter indicates a top up of the profit figure by N94 million to close in the region of N957 million for the full year.
The company earned roughly 12 kobo per share at the end of September 2020 against 9 kobo per share in the same period in 2019.
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