NEM Insurance dips 14% profit YoY to N4.4bn despite improved earnings
NEM Insurance has reported a year on year decline in its Profits After Tax in 2021 by 13% to close at N4.4 billion despite increasing its gross premium for the period. On a quarter on quarter basis, however, the profit declined by 42% to close at N2.3 billion.
The Insurer’s unaudited financial statement on the Nigerian Exchange shows that this was driven by movement along the financial statement during the period, particularly the underwriting expenses which brought down the underwriting profit for the year.
According to the report, total gross premium written was valued at N27 billion in 2021, a N5 billion high from the N22 billion the previous year. However, a N600 million unearned premium pushed the gross premium earned to N26.7 billion, a N5 billion 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 prioritise their preference scale in 2020.
Reinsurance premium at N7.2 billion last year led to a net premium income of N19.4 billion against the N15.9 billion in 2020 on the back of N5.8 billion reinsurance expenses.
The net underwriting income closed at N20.9 billion following fee and commission income deductible at N1.4 billion, a slight high from the N1.1 billion the previous year.
Underwriting profit closed at N6.6 billion in 2021 up from the N5.98 billion the same period, the previous year. Analysis shows that this was largely driven by activities in the underwriting expenses at N8.3 billion, 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 actual claimed expenses valued at N6.1 billion 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 a slight rise from the N1 billion while other income was valued at N484 million during the period. Also, other operating and admin expenses were valued at N3.3 billion causing the profit before tax to value N4.4 billion.
Report that the insurer in December suspended activities on the Nigerian exchange market to execute a share reconstruction exercise between December 10 and 29th.
The exercise led to an upward review from a nominal share value of N0.50 to N1.00 by the consolidation of every two (2) shares held by each shareholder into one (1) share.
A cursory review shows that during the period under review, there was an upward review of free float in the valuation of the company from N8 billion to a new N10 billion. Meanwhile, upon reconstruction, the valuation has further increased.
As of today, total market cap of the insurance firm stood at N16 billion.
