Continental Re posts N1.6bn profit after tax for 2012

By: Modestus Anaesoronye

Continental Reinsurance Plc, one of the nation’s top reinsurance companies with presence in key African markets, has posted a profit before tax of N2 billion and a profit after tax of N1.6 billion in the 2012 financial year.

The firm reported a comprehensive net income of N1.7 billion, which is a 44 percent growth rate over the figure in 2011, according to the company.

Gross Premium Income (GPI) grew by 6.4 percent to N12.4 billion spurred by strong performance on the Life portfolio and more moderate growth on the non-Life side, and constrained by tighter underwriting standards and significant negative exchange rate movements against the naira in certain key regional markets.

Retrocession Premium at N1.6 billion reflects an increase in the retrocession ratio from 11.1 percent to 12.5 percent. The increase reflects firmer market conditions and higher costs incurred in purchasing extra catastrophe protection and more capacity to augment Oil and Gas underwriting capacity.

The Loss Ratio controlled at 46.1 percent was slightly better than the budgeted 46.5 percent, and gross incurred claims increased by 24.9 percent due to the impact of the occurrence of a major fire loss at Dangote Sugar Refinery and the strengthening of loss reserves in conformance with a sterner risk management framework.

However, the net claims incurred increased by a much less margin at 7.4 percent as a result of retrocession recoveries. Net underwriting expenses increased by 8 percent from N4.1 billion to N4.4 billion with the overall ratio deteriorating marginally from 40.5 percent in 2011 to 42.4 percent in 2012, mainly due to increase in management expenses. The net acquisition costs ratio reduced to 23.5 percent in 2012 from 26.3 percent in 2012 while the management expenses ratio increased from 8.7 percent to 12.0 percent. The growth in management expenses was mainly as a result of increase in valuation of the staff gratuity plan.

Despite pressure from the above factors, the Company returned a strong overall underwriting profit of N1.2 billion, while investment and other income at N1.4 billion was higher than last year’s by 62 percent mainly due to seized opportunities on the back of an improved investment climate.

Total Comprehensive Income at NGN 1.7 billion is 44 percent higher than that for 2011 of N 1.2 billion driven by a positive underwriting result and strong investment income underpinned by healthy fair value adjustment of financial assets.

Source: BusinessDay