Share of associate loss amounting to over N1 billion gulped the operating profit of Coronation Insurance Plc and left a net loss of a little below N669 million for the company at the half year.
The loss figure is however a cut down from the first quarter loss of over N992 million, as the company operated the second quarter with an after-tax profit of about N324 million.
The company’s unaudited report at the end of June 2023 shows an improved second quarter in which a turnaround from an operating loss of N39 million to an operating profit of over N634 million was achieved.
The operating profit figure for the second quarter accounted for much of the half-year figure of N686 million. Also, the share of associate profit overturned from a loss of N292 million in the same quarter last year to over N33 million for the second quarter.
The half-year numbers show that while the operating profit of the risk underwriting firm fell by 46.5 percent year-on-year, the share of associate loss rose by 73.7 percent, which caused a plunge in the bottom line from over N490 million in the same period last year into the red.
The loss has helped to multiply the group retained deficit three times from slightly over N1 billion at the end of last year to N3.4 billion at half year.
The risk underwriter has relied on associate profit to boost the bottom line in recent years but the tide has turned to the other side of associate loss hurting profit.
The drop in operating profit at half a year follows a sharp fall in total investment and other income from N1.1 billion in the same period last year to N725 million. The loss of investment earnings was not remedied by underwriting revenue, which ended flat.
Net premium income for the six months of trading amounted to below N5.9 billion, which only increased 2.8 per cent from N5.7 billion in the same period in 2022. Some support came from an increase of 63.7 per cent in fee and commission income to N889 million over the period.
The increase in fee and commission income stretched out the margin of increase in net underwriting revenue to 8 per cent to close at over N6.7 billion at the half year.
A drop of 25 percent in claims expenses helped the company manage its revenue constraint. However, an increase of over N1 billion in outstanding claims consumed the cost saved from claims reduction.
However, claims expenses recoverable from reinsurers provided the claims management solution with a high jump of 184.7 per cent to almost N2 billion. The increase enabled management to keep net claims expenses flat at N1.4 billion at the end of the half-year operations.
Underwriting expenses, however, could not be contained, which grew by 35.9 percent to almost N1.8 billion at the end of the period. Total underwriting expenses therefore grew by 16.9 percent to over N3 billion – which left underwriting profit flat at less than N3.6 billion.
With the drop in total investment income against flat underwriting profit, net income declined by 7.4 percent to less than N4.3 billion at the half year.
Total operating expenses grew by 7.6 percent to N3.6 billion over the period to claim much of the operating profit – slashing it from about N1.3 billion to N686 million over the review period.
Share of associate loss erased the operating profit and created a pre-tax loss of about N478 million while a tax expense of N191 million dressed down the net loss figure to roughly N669 million for Coronation Insurance at the end of June 2023.
Associate loss is turning out big for the company for the second year after N2 billion share of the loss in 2022 claimed more than 56 per cent of operating profit but still left a profit of N1.3 billion for the year.
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