Q2 2023: African Alliance posts ₦482.5m net loss, as gross premium dips 14% to ₦3.78bn

African Alliance Insurance Plc has posted a loss after tax of ₦482.5 million for the half-year ended June 30, 2023, tumbling from a profit after tax of ₦154.3 million recorded in the corresponding period of 2022, on the back of a 14.1 percent drop in gross premium written to ₦3.78 billion.

The company’s delayed unaudited second-quarter financial statements submitted to the Nigerian Exchange (NGX) showed that net premium income also fell to ₦3.45 billion from ₦4.12 billion in the first half of 2022.

The underwriting top line contracted amid persistent sector competition and legacy operational headwinds.

Underwriting margins remained under severe pressure throughout the six-month period, driven by sustained claims settlements and administrative expenses. African Alliance disbursed ₦2.14 billion in gross claims, compared to ₦2.43 billion paid out in the same period of 2022.

Net claims incurred closed at ₦1.89 billion after reinsurance recoveries and reserve adjustments, consuming more than half of the insurer’s net earned premium. Concurrently, underwriting expenses climbed to ₦1.12 billion from ₦985.4 million a year earlier.

Income from ancillary operations offered some buffer against the core operational downturn. Investment and other operating income expanded to ₦1.46 billion, compared with ₦1.18 billion generated in the comparative half of 2022, lifted primarily by interest-yielding instruments and rental revenue.

Meanwhile, management expenses recorded a slight moderation, dropping to ₦1.68 billion from ₦1.79 billion twelve months prior.

The elevated operating outlays and underwriting liabilities pushed the underwriting firm into the red, yielding a loss before tax of ₦468.2 million, a reversal from the ₦185.6 million pre-tax profit logged in the midpoint of 2022.

A subsequent tax expense widened the comprehensive loss to ₦482.5 million for the period under review.

The balance sheet highlights mounting solvency and balance sheet strains.

Total assets stood at ₦43.15 billion as of June 30, 2023, while total liabilities advanced to ₦50.82 billion, driven largely by ₦38.64 billion in insurance contract liabilities and ₦6.72 billion in investment contract liabilities. The overhang of total liabilities over assets left the life underwriter with negative shareholders’ funds of ₦7.67 billion at the end of the second quarter.