Wapic Insurance Plc: Efficient underwriting capacity underpins profit
It isn’t easy for insurers to break even in an environment fraught by a deluge of challenges such as apathy towards taking up a policy, low consumer purchasing power, poor regulations, high cost of doing business and poor regulations.
High cost of doing business is bloating the expenses of insurers- who spend more on diesel to run expenses because electricity from the nation grid is unreliable- whilst a low rate environment means they are left with a very slim margins.
The unpredictable and volatile macroeconomic environment is increasingly undermining growth, which is why insurers are playing catch up game with peers in Sub Saharan African.
Nigerian economy has been growing sluggishly, even after the country exited its first recession in 25 years, as first
According to a recent data from the National bureau of Statistics (NBS), GDP growth slowed to 2.01 percent year on year (yoy) in the period from 2.38 percent year on year yoy in the fourth quarter of 2018, below loomberg consensus estimate of 2.54 percent.
To further exacerbate the already anemic position on operators in the insurance industry is that over 50 percent of a poplation of 180 people live below $1.98 a day, making it practically difficult for them to take up a cover.
Amid these myriad of challenges, Wapic Insurance Plc has been thriving as underwriting capacity improved, which means the company has spending less on operating and claims expenses in generating each unit of premium, as improved efficiency ratios conrinue to bolster profit.
For the first three months through March 2019, Wapic Insurance’s combined ratios fell to 75.92 percent from 117.28 percent the previous year.
The combined ratio measures costs and claims as a percentage of premiums, so the further it is below 100 the more profitable underwriting has been.
The Nigerian insurer has been growing underwriting profit at a blistering pace in the last three years, thanks to consistent growth in revenue and
an appropriate mix of claims and underwriting expenses.
Underwriting profit increased by 61.79 percent to N1.25 billion in the period under review from N772.60 million the previous year.
Real underwriting profit stood at N676.64 million in March 2019, from a loss of N271.02 million posted the previous year.
Wapic Insurance’s claims or loss ratio reduced to 33.35 percent in March 2019 from 44.04 percent the previous year.
The Nigerian insurer’s operating or management expenses ratio fell to 41.97 percent in March 2019, from 73.24 percent; this means the company’s spending less in running operations in generating each unit of premium income.
Total operating expenses were up a mere 3.50 percent in the period under review, lower than the 11.37 percent April inflation figure.
Despite a low penetration environment, Wapic insurance has been growing revenue, thanks to the introduction of market penetrating products and excellent marketing strategy.
Gross premium written (GPW) increased by 58.85 percent to N4.02 billion in the period under review from N2.53 billion the previous year.
A breakdown of gross premium written shows revenue from Group Life stood at N1.16 billion as at March 2019 while premium from oil and gas remained flat at N1.38 billion.
Premium income from general accident was up 7.84 percent to N743.12 million in the period under review from N689.71 million as at March 2018.Motor increased by 73.96 percent to N502.02 billion as a against N288.58 million the previous year.
As part of the efforts to boost insurance confidence, Wapic Insurance established an ombudsman desk where displeased policyholders can lodge their complaints.
The Managing Director/ Chief Executive Officer of the company, Mrs Yinka Adekoya, said the ombudsman would ensure fair hearing from both parties, and settle every dispute amicably to improve customer experience.
Wapic Insurance’s profit after tax surged by 100.07 percent tp N490.48 million as at March 2019, from N233.41 recorded the previous year.
While Wapic recorded a double digit growth in revenue, profit, and margins, the insurance industry contribution to the economy remains abyamally poor.
Nigeria, with a population of 180 million people, has a penetration rate of 0.3 percent.
That compares with South Africa (14.7 percent), Kenya (2.8 percent), Angola (0.8%) and Egypt (0.6%). Similarly, the sector’s insurance density (a measure of industry gross premium per capita) is still one of the lowest when compared to peers – South Africa ($762.5), Egypt ($22.8), Kenya ($40.5) Angola ($30.5) and Nigeria ($6.2). About Wapic Insurance
Wapic Insurance Plcis a leading West African full line insurance company offering a diverse range of products and services covering life, general and special risk businesses. We were founded in 1958 and licensed to underwrite all classes of insurance, such as fire and special perils, goods-in-transit, all risk insurance etc.
Over the last half century, Wapic has garnered experience across Nigeria in risk management and underwriting, and assisting corporate entities and individuals with various classes of cover. Wapic operates two business lines; Wapic Life Assurance Limited which operates in Nigeria, and; a regional footprint in Ghana, Wapic Insurance (Ghana) Limited.
In order to bolster the company’s ongoing repositioning and restructuring initiatives, Wapic merged with Intercontinental Properties Limited; a development which has significantly enhanced Wapic’s underwriting capacity and placed it amongst the top five insurance companies in Nigeria .
Wapic seeks to be a truly diversified financial services institution that provides protection against all forms of insurable risks to all customer segments and become one of the top twenty financial services institutions in Nigeria by 2017.
Wapic has been listed on the Nigerian Stock Exchange since 1990.