Coronation Insurance Plc has pulled back from a loss of N2.6 billion in the preceding financial year to build an after-tax profit of N1.3 billion at the end of the 2022 financial year. This is in spite of a bad turn from associate profit – that had been critical to the bottom line in recent years to a share of associate loss of close to N2 billion at the end of the year.
The company’s unaudited report at the end of December 2022 shows a strong final quarter for the risk underwriter during which it raked in over N738 million or 55 percent of the closing profit figure for the year.
The fourth quarter saw a big turnaround from a loss of about N1.9 billion in the same period in 2021 which created much of the loss position for the company in that year. Cost management more than revenue gains provided the critical upside force for the turnaround in the quarter.
An increase of 15 percent in net underwriting income in the quarter to N2.7 billion was further supported by significant reductions in claims and underwriting expenses. Net claims expenses went down by 15.5 percent quarter-on-quarter to N732 million and total underwriting cost dropped by 36 percent to N1.4 billion over the same period.
The favourable cost-income combination yielded an underwriting profit of N1.3 billion – which towers far above the corresponding figure of less than N147 million in 2021.
The same massive growth pattern was repeated on the investment side of the company’s operations during the final quarter. Total investment and other income multiplied three times to N1.4 billion quarter-on-quarter in the final quarter.
Net income for the quarter advanced from N629 million to more than N2.7 billion.
The third angle of the company’s turnaround tripod came from the operating costs that dropped in the face of the massive growth in net income. At less than N1.5 billion, total operating expenses for the quarter went down by 26 percent quarter-on-quarter.
The cost saving jerked up operating results from a loss of almost N1.4 billion in the same quarter in 2021 to an operating profit of about N1.3 billion for the final quarter of 2022. This enabled the company to absorb easily an associate loss of N630 million in the quarter and with a tax credit of N90 million closed the quarter with a bottom line of N738.5 million.
The company’s full-year position follows the pattern of improving revenue reinforced with declining costs, which created a wide room for turnaround.
Net underwriting income grew by about 25 percent or N2.3 billion at the end of the year to N12 billion with strong growth of 82.5 percent in fees and commissions income to N1.7 billion.
The increase in net underwriting income was followed by a drop of 42.8 percent in net claims expenses to N2.9 billion. Total underwriting cost went down by 31.7 percent to N5.7 billion at the end of the year.
The favourable cost-income combination resulted in a big leap in underwriting profit from N1.2 billion in 2021 to N6.3 billion at the end of 2022.
The investment arm of the business was boosted by other income that advanced by 155 percent to almost N2 billion. Total investment and other income rose by 39 percent in the year to roughly N3.6 billion.
With revenue increases and cost declines, the company closed the year with net income multiplied more than two and half times to nearly N10 billion. A slight decline in operating expenses to N6.3 billion completed an all-around decline in costs for the company in 2022.
Coronation Insurance’s good earnings story of revenue gains and cost decreases produced the turnaround force that changed its fortunes from an operating loss of N2.6 billion in 2021 to an operating profit of N3.5 billion at the end of 2022.
This was good enough to absorb a share of associate loss of almost N2 billion and left a comfortable bottom line of N1.3 billion for shareholders. Earnings per share have recovered from negative 11 kobo in 2021 to 5.6 kobo in 2022.
Dividend however is out of the way with retained deficit swollen at N1.6 billion at full year.
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