Niger Insurance Plc built a loss of N575 million in the final quarter of the 2020 financial year that accounted for nearly one-half of the closing loss figure of N1.2 billion for the year. This shows a reduction from the unaudited loss figure of N1.6 billion the company posted in 2019.
The audited figure for the 2019 operations shows that the loss figure detracted widely to hit over N5 billion. It is, therefore, possible that the audited results for the 2020 financial year may equally vary significantly from the fourth-quarter numbers. The losses have wiped off a good part of the company’s capital base.
The risk underwriting firm has suffered massive revenue losses in recent years – which took the worst plunge in 2019. Gross premium income has dived from a five-year high of N10.6 billion in 2015 to only N903 million in 2019.
Revenue performance continued on the downside in 2020 with significant drops against the unaudited closing figures in the prior financial year. The company faced the worst revenue performance last year against a massive build-up of underwriting cost.
Total underwriting expenses approached three times the net underwriting income for the last quarter. The resulting underwriting loss for the quarter accounted for almost 60 percent of the closing underwriting loss of N720 million for the full year.
The company closed the 2020 operations with a net premium income of N915 million, which is a drop of 36 percent over the unaudited figure in 2019. With drop-in fees and commissions also, net underwriting income dropped by 37 percent to N937 million over the same period.
Against the sharp drop in net underwriting income, claims expenses surged up in the year. Net claims expenses multiplied more than two and half times over the review period to close at roughly N1.6 billion.
There was a sharp drop in underwriting expenses, which brought total underwriting cost to over N1.6 billion at the end of the year. That represents an increase of 69 percent over the closing figure in 2019. Total underwriting expenses stood at 177 percent of net underwriting income for the year.
The audited report for 2019 shows that the total underwriting cost was well over four times the net underwriting income.
The outcome of a big drop in net underwriting income and a high rise in underwriting expenses is a deep plunge into an underwriting loss. The company reported an underwriting loss of N720 million for the 2020 operations compared to an underwriting profit of over N561 million in 2019.
Further pressure on earnings performance in the year came from a decline in investment income, which amounted to N372 million. The figure was swallowed up by a net realized loss of N1.3 billion on available for sale financial assets. A profit of N620 million from the sale of investment property in the year helped to moderate the loss.
Niger Insurance closed the year with an after-tax loss of N1.2 billion, showing a reduction from over N1.6 billion loss the company’s management accounts showed at the end of 2019. The audited accounts for 2019 however show a net loss of N5.1 billion for Niger Insurance in the year.
The huge loss in 2019 built a retained deficit of over N6 billion that slashed the company’s equity capital by more than one-half to N4.2 billion. The further loss in 2020 has shot up the retained deficit to N7.8 billion, resulting in another 50 percent slashing of shareholders’ funds to N2 billion.
The company lost 15 kobo per share at the end of the 2020 financial year against 66 kobo per share in 2019. Niger Insurance underwrites life and general insurance businesses.
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