NEM Insurance’s grows profit by 52% to N2.9bn in Q1 2022
NEM Insurance Plc generated an after-tax profit of roughly N2.9 billion in the first quarter, which towers at 52.4 per cent of the 2022 full-year profit of N5.4billion. The general business underwriter is gaining speed from recovery in 2022 to high growth in the current financial year.
The first quarter interim financial report of the company for the period ended March 2023 shows exceptional strength on the earnings track this year that could beat last year’s closing profit by half a year.
Last year, the risk underwriting firm recovered from a profit drop from N5 billion in 2020 to N4.4 billion in 2021 and attained a new profit high of N5.4 billion for the year. The 22.7 per cent profit growth for the year has accelerated to 84.6 per cent year-on-year in the first quarter of the 2023 financial year.
The boost for the bottom line in the first quarter came from two major cost reductions in the face of a moderate increase of 7.4 per cent in gross premium earned to less than N12.8 billion.
The cost reductions include the slashing of reinsurance expenses from N2.7 billion to slightly over N1 billion over the review period. That helped to stretch out the outgrowth in net premium income at 27.6 per cent to N11.7 billion for the first quarter.
A sharp drop in fees and commissions from N491 million to N72 million over the period constrained the increase in net underwriting income to 21.9 per cent to close at N11.8 billion for the quarter.
The second cost reduction came from claims expenses that dropped by 13.5 per cent year-on-year to N2.9billion. The drop in claims expenses helped to dilute an increase of 29.7 per cent in underwriting cost — which amounted to roughly N4.7 billion at the end of the quarter.
The net effect is substantial cost moderation that permitted a leap of over 55 per cent in underwriting profit to N4.2 billion in the first quarter.
Some strength also came from investment income, which grew by 61.8 per cent year-on-year to close at N318 million for the quarter. With that, the company grew total income by 55.5 per cent year-on-year to N4.5 billion at the end of March 2023.
Investment income is staying elevated for the second year after rising by 37 per cent to the region of N1.6 billion in 2022.
An increase of 18.7 per cent in management expenses afforded some cost savings that enabled an increase of 78.4 per cent in pre-tax profit to N3.2 billion at the end of the period.
Earnings outlook for the year is quite promising for NEM Insurance with a huge build-up of over N7 billion in unearned premiums in the first quarter compared to N826 million in the same period last year. This is expected to translate into accelerating growth in premiums earned through the year.
NEM Insurance closed the first quarter operations with earnings per share of 28 kobo, up from 15 kobo per share for the same period in 2022.
The company closed the 2022 operations with earnings per share of N1.08 and paid a cash dividend of 11 kobo per share to shareholders.
