NIGERIA – NEM Insurance has reported a year-on-year decline in its Profits After Tax in 2021 by 14% to close an N4.4 billion (US$10.6 million) despite increasing its gross premium for the period.
The Insurer’s unaudited financial statement on the Nigerian Exchange shows the influence of movement along with the financial statement during 2021 as the cause.
The insurance company particularly took a hit from high underwriting expenses which brought down the underwriting profit for the year.
The report recounts total gross premium written was valued at N27 billion (US$65 million) in 2021, N5 billion (US$12 million) high from the N22 billion (US$53million) the previous year.
However, an N600 million (US$1.4 million) unearned premium pushed the gross premium earned to N26.7 billion (US$64.3 million), an N5 billion (US$12 million) from what was reported in 2020.
The 2021 high earnings reflect a recovery from the COVID year which saw lots of policyholders hold back premium as they had to prioritize their preference scale in 2020.
Reinsurance premium at N7.2 billion (US$17.3 million) last year led to a net premium income of N19.4 billion (US$47.7 million) against the N15.9 billion (US$38.3million) in 2020 on the back of N5.8 billion (US$14million) reinsurance expenses.
The net underwriting income closed at N20.9 billion (US$50.3million) following fee and commission income deductible at N1.4 billion (US$3.4 million), a slight high from the theN1.1 billion (US$2.6million) the previous year.
Underwriting profit closed at N6.6 billion (US$15.9 million) in 2021 up from the N5.98 billion (US$14.4 million) the same period the previous year.
Analysis shows that this was driven by activities in the underwriting expenses at N8.3 billion (US$20 million), which depict a significant year on year on year high of 67%.
This means that the insurer spent more on expenses related to business than it did on actually claimed expenses valued at N16.1 billion (US$14.7million) during the period, and at the same pace as the amount during the previous year.
Other items such as investment income recorded N1.13 billion (US$2.7million) a slight rise from the N1 billion (US$2.4 million) while other income was valued at N484 million (US$1.16 million) during the period.
Also, other operating and admin expenses were valued at US$7.9 million causing the profit before tax to value US$10.6million.
As of today, the total market cap of the insurance firm stood at N3.3 billion (US$38.5 million) despite Insurer’s attempt to upswing its valuation.
The advance was triggered by investors’ increase in the liquidity of the stock which made it tradable and attractive to sellers
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