The insurance services of Consolidated Hallmark Holdings in the first quarter ended in a loss of N73 million, bailout, however, came from the investing activities that generated net investment income of N2.8 billion for the period.
The company is locked in the earnings pattern for the second year, as no part of its underwriting revenue in 2023 crossed into profit. While insurance revenue grew by over 63 per cent year-on-year to N6.2 billion in the first quarter, insurance service and reinsurance expenses claimed more than all the money.
The first quarter interim financial report of the general business and special risks insurance underwriting firm for the period ended March 2024 shows that insurance service expenses grew well ahead of insurance revenue at 83.7 per cent year-on-year to almost N5 billion.
Reinsurance expenses grew by 90 per cent to about N1.3 billion over the period, meaning that all the insurance revenue generated was insufficient to meet insurance service and reinsurance expenses. Leading the increase in insurance expenses is an appearance of over N700 million incurred fulfilment expenses, followed by an over 101 per cent rise in amortisation of insurance acquisition to over N1.8 billion.
Insurance claims liability also grew by 80.5 per cent to N5.5 billion. The growth in insurance expenses was further pressured by a sharp drop in recoverable claims from reinsurers – which fell from close to N1.5 billion in the same period last year to N210 million in the first quarter ended March 2024.
The strong growth in reinsurance expenses alongside a sharp drop in recoverable claims is the main source of pressure on the company’s insurance revenue during the quarter leading to the loss in insurance service results.
The insurance service loss of N73 million in the first quarter compares to an underwriting profit of N405 million in the same period in 2023. The upside functions for the company in the first quarter came from its investment activities that more than compensated for the disappointing underwriting result. These were led by fair value gain on financial assets that took a long jump from N4.4 million to roughly N1.9 billion on year-on-year reading.
Following is a net foreign exchange gain of N522 million against a zero inflow in the same period last year. Interest earnings also grew by about 19 per cent over the period to N442 million in addition to some cost saving from a drop of over 36 per cent in net credit impairment charges to N7.7 million during the quarter.
Consolidated Hallmark Holdings therefore raised net investment income of the group close to eight times from N364 million to over N2.8 billion in the first quarter. This gave life to the company’s outing in the first quarter, absorbing the loss from insurance services and closing the period with net insurance and investment results of over N2.7 billion.
This was the earnings pattern for the company last year when a 32 per cent increase in insurance revenue to N15.7 billion produced an insurance service loss of N116 million at the end of the year. Its net investment income of N6.4 billion accounted exclusively for the closing profit of N3.8 billion for the 2023 operations.
At the close of the first quarter, pre-tax profit amounted to N2.2 billion, close to five times the corresponding figure of N459 million in 2023. The after-tax profit stood at roughly N1.5 billion, a jump of close to six times the N258 million the company posted in the same quarter last year.
The company earned 13 kobo per share at the end of the first quarter compared to 2 kobo per share in the same quarter in 2023
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