Royal Exchange records N12.5bn gross premium income
Nigeria’s premier insurance and financial services group, Royal Exchange Plc has generated a Gross Premium Income of N12.5 billion from its business activities ended December 31, 2016.
The figure represents an increase of 16 per cent over that of 2015, which stood at N10.8billion. The Group Managing Director of the company, Alhaji Auwalu Muktari, disclosed this following the release of the financial results on the floor of the Nigerian Stock Exchange (NSE), recently. According to the details, Net Premium Income for the period amounted to N8.2 billion, with a minimal growth over that of Year 2015, which stood at N8.1billion, while underwriting profit witnessed a 19 per cent spike from N1.6 billion in 2015 to N1.9 billion in the financial year under review. A further analysis of the operating results showed that the Total Assets of the group witnessed a growth of 20 per cent, from N26.5 billion in 2015 to N31.7 billion as at December 31, 2016.
Net claims paid for the period under review amounted to N3.6 billion, an increase of 20 per cent from 2015, which was N3.0 billon. Net Income before management expenses grew by 13 per cent to N2.7 billion, up from N2.4 billion in 2015. Muktari stated that despite the very harsh operating environment in the year under review, the group was able to grow its top-line figures by participating in large-ticket financial transactions, as well as playing in the retail insurance market, which shall be a key growth driver in the years ahead. According to him, “Royal Exchange Plc envisions a situation where the retail insurance market should be able to contribute between 50-60 per cent of our revenues in the future, as the retail market is the future of insurance in Nigeria, considering the population of the country.”
Speaking further, he noted that “Royal Exchange Plc will, in the years to come, continue to be an aggressive player in the retail market in Nigeria and will be looking at different strategies to increase its product offering and visibility in the marketplace, while not losing track of the corporate market, where the returns and margins, are dwindling, yearly.”
He noted that the bottom-line result of the group did not turn out as expected, due to increase in cost of doing business in the country, especially in the area of power generation in the over 33 locations where the group’s operations are located in Nigeria.
He further noted that a major drawback in the profit of the company was an adverse result arising from the year’s mark-to-market valuations of the company’s insurance long-term contract liabilities and annuity funds done by the Consultant Actuary as required by both the IFRS and National Insurance Commission (NAICOM). He stated that the exercise severely hampered the profitability of the company during the financial year ended December 31, 2015 and 2016 respectively. To stem this tide, Muktari said: “The company has implemented various cost optimization strategies and business process re-engineering measures which shall guarantee profitability in both the current financial year and the years ahead.