How Coronation Insurance’s Poor Underwriting Result Rebound To N6bn Profit At H1

Outstanding growth in investments and other operating incomes aided Coronation Insurance Plc in overwriting a 76.5 per cent drop in underwriting results and caused a rebound from the red to N6.3 billion profit at half year.

Net investment income multiplied well over six and half times year-on-year at half year to almost N5 billion, and other operating income revived from a loss of N14.5 million and surged to over N5 billion over the same period.

The company’s unaudited report at the end of June 2024 also shows that the share of associate profit characterised by the up and down swings, is on the upswing this year at N983.7 million, reinforcing a profit performance.

While the underwriting business drives the company’s business volume, its contribution to operating results is poor.

Insurance revenue nearly doubled at over 97 per cent year-on-year at the end of June but insurance service results fell from roughly N1.9 billion to N443 million in the period.

This means that no part of the additional insurance revenue of N10.6 billion during the period was converted into underwriting profit.

Insurance and reinsurance expenses claimed more than all the increase in insurance revenue. Reinsurance expenses posed a bigger challenge with a huge increase in premium payments against a drop in recoverable claims.

Reinsurance premiums more than doubled at over 116 per cent year-on-year to N8.6 billion at half year but claims recovery from reinsurers dropped by 26.5 per cent to N1.4 billion.

Net reinsurance expenses, therefore, multiplied more than three and half times to over N7 billion at the end of the half-year operations. That slashed underwriting results from about N1.9 billion to N443 million over the review period.

The net fair value gain of N3.5 billion on financial assets is a big boost from investment activities within the period, a windfall from zero records in the preceding reporting period.

Added to that is an investment income of about N1.4 billion that grew from N711 million in the same period in 2023. Net investment income therefore advanced from N744 million to roughly N5 billion in the half year.

Despite the increase in net finance expenses from N158 million to N581 million over the review period, net insurance and investment results doubled to over N4.9 billion at the end of the half-year operations.

Other operating income, the main growth driver for the year so far, turned around from another operating loss of N14.5 million to over N5 billion in the half year. Part of the gain was claimed by other operating expenses that grew by 85.6 percent to N3.3 billion over the period.

Contributing to the elevated bottom line is a share of associate profit that rebounded from a loss of N1.2 billion in the same period last year to about N984 million at the end of June 2024. Share of associate loss had accounted for a pre-tax loss of N512 million in the same period last year.

The company closed the half-year operations in June 2024 with a rebound from a restated loss of N728 million to an after-tax profit of N6.3 billion.